Health Insurance Companies Should Justify Premium Increases

By Sen. Chris Edwards of Eugene, Oregon and Sen. Chip Shields of Portland, Oregon.

Oregon families and businesses have seen too many double-digit health insurance rate hikes in recent years approved by Oregon's Department of Consumer and Business Services (DCBS) insurance division.

Thanks to the division's new administrator Teresa Miller, that might be about to change.

The health reform package we passed in 2009 covers an additional 80,000 Oregon kids and an additional 35,000 adults. But this increased coverage for the previously uninsured will only mean lower costs for small businesses and those who already have insurance if we hold health insurance companies accountable to justify proposed premium increases.

We believe that health insurance companies should have to justify premium increases.

We believe that small businesses and consumers should be able to contest the outrageous premium increases that are squeezing Oregon’s middle class.

But there’s no way to contest premium increases if the insurance companies are holding back key actuarial data from their rate filings.

You may have seen last year’s news story about Regence policy holder Karen Kirsch and her pro bono attorney former state senator Charlie Ringo, who were the first to contest a premium increase through the state’s administrative hearings process. Kirsch lost in part because Regence was allowed to redact key parts of their rate filing by claiming these parts were trade secrets.

That’s why one of us, Sen. Chip Shields, quietly brought together a dream team of small-business and consumer advocate “Davids” to quietly fight the health insurance corporate lobby “Goliaths” on rate filing transparency. Because you can’t contest what you can’t see.

The dream team included public interest lawyer Linda Williams; health care economist Larry Kirsch, who is Karen Kirsch’s spouse; Oregon Small Business for Responsible Leadership’s Ann L. Fisher ; Cessco Inc. HR manager Sean Moriarty; and former Health Net VP Rick Skaylan. They joined with OSPIRG’s Laura Etherton to argue forcefully that no part of a rate filing can justifiably be withheld from public scrutiny. Etherton and OSPIRG have been at the forefront of fighting this battle from the start.

You can read their arguments in favor of transparency, and the arguments against transparency, by clicking here.

Moriarty of Cessco, a small business in Northeast Portland got it right. He wrote:

The industry has not cited any evidence that what they submit is a trade secret...

Small businesses are the backbone of the economy in Oregon. Business owners need to focus on doing what our business do best. We are asking that your division help us remain competitive by controlling the health insurance rates for our businesses. If the carriers were charging reasonable rates, the laws and the Insurance Division to regulate them would not exist.

It is understandable that each carrier fears other carriers using their information, but the purpose of the rate filings is to protect the consumer from unfair rate increases, not to protect the carriers from themselves.

So will the state’s top insurance regulator put that new power to crack down on excessive premium increases to use?

We're officially upgrading our status of “skeptical” to “cautiously optimistic” today.

Why? DCBS Insurance Division Administrator Teresa Miller has released draft rules for how it will implement the new law. And we're impressed. Are the rules perfect? No. Consumer advocates and small business owners tell us they could be stronger. But they also say that if Miller finalizes these rules despite insurance industry pressure to weaken them, it may mark the beginning of a new era of making insurance companies justify their rate increases.

All the materials insurance companies submit to justify premium rates will be available to the public for review and contest. They'll also have to provide information on their full financial position as part of rate review process.

Insurance companies will have to limit increases in their administrative costs to the cost of living for the previous year (according to the Producer Price Index for Direct Health and Medical Insurance Carriers Industry), unless proven to be necessary and appropriate.

Insurance companies will have to report on changes to their health care cost containment and quality improvement efforts.

Insurance companies want the rule weakened, particularly the provision requiring their rate hike justifications be made public. AHIP, the insurance companies' lobbying arm known for its well-heeled efforts to crush reform at the state and national levels, submitted eleventh-hour comments wanting changes in the rules as well.

To be clear, it will take more than tightened insurance regulation to drive down health care costs. That's why this is just one component of the comprehensive bill we passed in the 2009 session.

But it's impossible imagining making progress on health care costs without strong rules like this, wielded by a watchdog looking out for families and small business owners.

Miller is on the right track. We urge the state insurance division to approve and finalize these draft rules.

And we’ve got a bill, SB 1029, ready in February just in case.

Jan. 30, 2010 Posted in guest column.