Big Boosts In Premiums For Health Insurance
Two of the region’s three
dominant health insurers intend to raise premiums on average by double digits
for next year, and the third wants a double-digit increase for plans not
structured as health maintenance organizations.
The premium for one insurance
plan could rise almost 36 percent.
The insurers cite rising costs
of medical care and federal health care reforms.
The question is whether the
state will let them.
Under a new state law, health
insurers must submit their premiums to the state Insurance Department for
approval before they take effect.
The state can reject or modify
the increases if regulators feel they are not appropriate or justified.
The law also means insurers
must disclose their rate plans much earlier than in past years.
Reaction from consumers and
small businesses has been swift.
“There’s no question that
there’s frustration and anger,” said Howard N. Silverstein, president and CEO
of Choice Employee Benefits Group LLC, an insurance agency. “Everybody I’ve
talked to cannot believe that some of the rate increases are as high as they
are.”
Joe Milazzo, owner of Milazzo
Renovations in Lancaster, already was paying ,200 a month for individual
coverage from Independent Health Association when he got a notice of an
increase of roughly 15 percent.
“It’s craziness,” he said.
“It’s getting to the point where health insurance payments are more than the
mortgage payment.”
So he went to the Amherst
Chamber of Commerce’s insurance broker and got almost the exact same plan from
BlueCross BlueShield of Western New York for ,351.72 — but every three months,
because he is now in a group plan.
“We’re talking a lot of money
in savings, for virtually the same plan. I still don’t believe it,” he said.
‘Entire industry changing’
In response, employers are
expected to cut back on benefits and ratchet up the amount that employees and
their families pay to share in the costs — through higher deductibles, co-pays
and co-insurance.
“Our clients … have come to
expect double digit increases the past few years,” said Colleen C. DiPirro,
president and CEO of the Amherst Chamber, which helps small businesses get
health insurance. “However, it doesn’t make it any easier for them to absorb
the costs.”
“At the end of the day, I think
the entire industry is changing and people are going to become more acclimated
to paying more out of pocket and utilizing health insurance for major claims to
keep them from financial ruin as a result of a health issue,” she said. “That
is the only way we can insure the masses.”
The average requested increase
across the board for BlueCross Blue-
Shield was 13 percent,
according to information filed with the state Insurance Department, but the
increases range from 3.9 percent on one HMO to 28 percent.
Increases would range from less
than 10 percent for 30 percent of members to 10 percent to 15 percent for 45
percent, and more than 15 percent for more than 22 percent of those covered.
Independent Health’s rates
would rise 10 percent overall, but the increases would range from 7.4 percent
on an HMO to 35.8 percent for its small-group high-deductible health plan,
where the deductible is not changing. For 1 percent of the company’s small
group subscribers, increases would exceed 21 percent.
Univera Healthcare wants to
raise rates by 5.4 percent for its Transitions, direct-pay HMO and
point-of-sale plan, and 11 percent for all of its other products.
The insurers noted that the
premiums and estimated ranges apply only to their base policies, before taking
into account individual “riders” that modify coverage for group plans. Also,
they are not final until approved.
Independent Health submitted a
1,200-page rate filing July 29, one of the first to do so, and responded to
questions once with another 600 pages.
“It’s a ridiculous process,”
said Dr. Michael Cropp, the insurer’s CEO.
Univera spokesman Peter Kates
said the company submitted its information in August but has not heard back
from the state.
Comments reveal rage
HealthNow, the parent of
BlueCross BlueShield, filed rates Sept. 1 and has talked to state regulators.
But “we don’t have any insights” about how the state will rule, said Stephen T.
Swift, the insurer’s chief financial officer.
“They’re very, very stretched,”
Swift said. “I’m optimistic the state will approve these rates as filed, but I
can’t say we have any indication.”
Comments from the public to the
state Insurance Department are being posted, with names blacked out, on the
department’s Web site.
“This is preposterous!!!!”
wrote a woman who co-owns a business with her husband. Independent Health had
notified them of an 11.8 percent increase. “Who on earth can afford this? … The
cost of health insurance now is an almost unmanageable burden. This new
increase would put us out of business.”
“In these economic times to
propose an average 14 percent increase in health care is absurd,” wrote another
person who appears to be an insurance agent. “I am not looking forward to
meeting my clients and trying to explain these incredible increases while their
expenses rise and wages fall.”
“I am writing to express my
disgust,” wrote another small business owner, who claimed to have received
notice of a 37 percent rate increase.
A dental health care
professional wrote: “I wish my income increased as much as my health insurance
premiums have.”
As they do each year, the
insurers defended their increases as necessary to account for the
ever-increasing costs of providing care for their members. Companies routinely
cite the high costs of and growing consumer demand for new diagnostic
technology and hospital treatments, such as colonoscopies, heart surgeries,
radiation and chemotherapies, and intensive services for patients during
emergency room visits.
They also point to the high
cost and use of sophisticated drugs, especially brand-name and specialty
prescription drugs or injectable medications for some of the most serious
medical conditions.
“Each year, medical inflation
and a continuing increase in the use of medical goods and services combine to
drive health care costs higher,” Univera wrote in its own letter. “To cover these
increasing costs, we must modify premium rates.”
Consolidation among providers
also has reduced competition to some degree, allowing prices to creep up. And
the local insurers are quick to note that their administrative costs are much
lower than the national average and especially for-profit health plans.
“Obviously our push is to drive
those rates as low as possible,” HealthNow’s Swift said. “We know our
customers’ concerns as far as affordability and access.”
But they also have treaded in
waters that even the White House has deemed inappropriate, by blaming the
federal health care reforms. Obama administration officials have warned the
industry and its national trade group not to justify rate hikes by citing the
reforms.
Notices called “deficient’
So far, requirements for full
coverage of preventive care with no co-pays on screenings, the elimination of
annual and lifetime limits and coverage for young adult dependents up to age 26
are the only reform provisions that have taken effect.
“Independent Health has
evaluated the cost of our members’ health services and benefit changes,
including those mandated in conjunction with health care reform,” the carrier
wrote in a letter to small employer groups. “As such, we have determined that
we must adjust our premiums for 2011.”
Late last month, after the due
date for the filings, the Insurance Department issued a statement criticizing
many of these notices to employers as “deficient, if not misleading, and in
violation of the new prior approval law.” That law was designed to allow
insured consumers an opportunity to understand any rate increase and to comment
or ask questions about it.
“These type of misleading
notices have the effect of confusing members and masking the underlying reasons
that a rate adjustment is being requested,” the Insurance Department wrote in
its letter to insurance companies, directing them to provide consumers and
employers with details.