OSPIRG Says Regence BlueCross BlueShield Must Justify Proposed Rate Increase
January 12, 2012 -- Before the Insurance Division approves the rate request for small employers by Regence BlueCross BlueShield, it needs to justify those increases, according to Laura Etherton, healthcare advocate for OSPIRG Foundation.
Health insurance premiums are reaching $2,000 a month and beyond for some families, Etherton added. “And, small businesses are hanging on by their fingernails. We’re calling on Regence to redouble its efforts to lower costs not by raising deductibles but by improving access to prevention and reducing waste.”
Regence’s proposed rate request would impact 47,806 small businesses (fewer than 50 employees). Employers whose insurance policies renew between April and June would realize a 4.5% increase, on average, while the 34,790 businesses that renew starting in July would see their rates jump by 8% on average.
And, some businesses, with older employees in certain regions of the state, could see their rates rise by as much as 15%.
The Insurance Division anticipates making a decision by January 20.
To justify these increases, Regence anticipates a 10.8% increase in medical costs and 12.2% in prescription costs.
Two drugs have seen dramatic increases in the past several years, according to Karin Swenson-Moore, director of actuarial pricing at Regence, who said the cost for Copaxone, a drug used to prevent the relapse of multiple sclerosis, has risen by 329% since 2007 from $320,753 to $1,237,478 in 2011.
Another drug known as Humira, which treats psoriasis, rheumatoid arthritis and Crohn’s disease, saw a 444% increase over the same time span, and cost $1,042,698 last year.
Despite this information, Regence’s claim costs only rose by 3.5% in 2011, said Etherton. And, its proposed medical trend is “greater than the medical trends used by other insurers in the small business market.”
Since raising rates last year for small employers, Regence saw its enrollment decline by 10%, after nearly 6,000 businesses dropped coverage.
That decline troubles Etherton. “We certainly hope their enrollment will stabilize. Last spring they said that they didn’t expect a change in enrollment when they requested a rate increase. Given the fact their enrollment is declining, Regence can benefit even more from aggressive efforts to lower its costs.”
Regence is attempting to control costs going forward, Don Antonucci, president of Regence BlueCross BlueShield, told Insurance Division regulators at a hearing earlier this month. “We’re doing everything we can to make healthcare affordable” and stabilize and rebuild membership.
To help small businesses, Regence has begun offering a new product known as Employee Choice, a multiple option choice product that provides employers moe flexibility to better assist employees with different healthcare needs. To date, 60 groups have chosen this option with about 800 members, and it accounts for 13% of Regence’s small group business, Antonucci said.
TO LEARN MORE ABOUT REGENCE
To read about Regence BlueShield leaving the Medicaid market in Washington, click here.
To read about Kaiser being on pace to take the membership mantle away from Regence, click here.
To read about the $100,000 fine imposed by CMS and find the board members of The Regence Group, click here.