More states need rate review like Oregon
By Consumers Union on Wednesday, July 20th, 2011
Today, the Oregon insurance regulator rejected Regence’s request for a 22.1% rate increase and instead approved a 12.8% rate increase, saving consumers $12.5 million in the next year.
The Department thought it was imperative to significantly lower the rate increase because a higher rate increase “would cause healthier members to drop their coverage, driving rates even higher for those remaining, many of whom with health conditions that prevent them from seeking coverage elsewhere.”
Oregon was able to limit the rate increase because its Department of Consumer and Business Services (DCBS) is authorized to review the overall financial status of a health insurer when reviewing rates. Using this rule, DCBS rejected Regence’s proposed 1.1% profit in the individual market. The Department considered that Regence had recently sent $56 million dividend to its parent, The Regence Group, and that it has more than an adequate capital and surplus. Regence will use surplus to cover any losses resulting from the rate filing decision.
Not surprisingly – the regulator rejected some of the factors Regence used to try to justify its proposed rate hike. The decision rejects the inclusion of a factor Regence called “fluctuation” to cover unexpected medical claims. The increase due to health reform got knocked down to 3.4% from the requested 5.5%
Oregonians have access to all of the information health insurance companies file for rate hikes and The Oregon Insurance Division must review health insurance rates for individual, small employer (2-50 employees), and portability plans before they take effect in Oregon. Oregon also has a 30 day public comment period. DCBS also re-granted $100,000 of its HHS grant to OSPIRG to provide detailed comments on rate filings.
For other states legislators wanting to protect their consumers – here is what needs to be included in a strong rate review:
Funded consumer involvement
Allowance for regulator to look at the whole picture
Congratulations to OSPIRG for participating in this process and thank you to Administrator Teresa Miller for protecting consumers from an excessive rate hike. Right now the California legislature has the opportunity to pass strong rate review. We urge the California legislature to learn from Oregon and protect Californians by passing AB 52.