Holding health insurers accountable for costs

What if health insurance companies had to stand before the public and clearly justify their rate hikes? That wouldn’t solve every problem in our astonishingly dysfunctional health care system, but it sure would help.

We’re already on the right path but it could be better.

Here’s the good news. In 2010, Oregon strengthened the standards that health insurance companies must meet before raising premium rates for small businesses and people who buy individual coverage.  Insurers must justify rate hikes, showing that they are not excessive.

The Oregon Insurance Division evaluates these justifications, which include information about the insurer’s administrative expenses, financial position, and what the insurer is doing to reduce costs in ways that improve quality for patients. All rate filings are public information, available online, and open to public comment. The Insurance Division is required to take public input into consideration when considering a rate proposal. Learn more about Oregon’s rate review process.

Here’s a positive example of how this works. UnitedHealthCare recently wanted to jack up premiums by almost 17%. After OSPIRG’s research branch, OSPIRG Foundation, discovered problems with that rate filing, state officials knocked back the request to 10%, saving 14,000 customers a total of $4 million. Just as good, United HealthCare is making some permanent changes to the way it pays brokers that should save consumers money beyond this year.

But let’s be clear: A 10% rate hike is still unaffordable for consumers and businesses in this economy. And although we commend state officials for their work thus far to hold down rates, we know more can be done to scrutinize health insurance companies and push them harder to control the cost of health care.

That’s where State Senator Chip Shields comes in. A long-time leader in the fight to control health care costs, Senator Shields has proposed a package of common sense bills in Salem that will give consumers more protections – and tools – to hold insurers accountable for keeping costs down. Here’s a quick rundown:

Senate Bill 717: Authorizes Oregon’s Insurance Commissioner to conduct a public hearing when a health insurance company proposes to raise premiums, and empowers Oregon’s Attorney General to advocate for policy holders’ interests. A public hearing is a great way to involve more Oregonians in watchdogging health insurance companies, especially if we can count on the Attorney General to speak up for the consumers who can’t make the hearing.

Senate Bill 718: Requires Insurance Commissioner to post detailed rationale for approval of rate increase request. Currently, the Insurance Commissioner only does a summary of their decision. This bill would require, for example, to outline precisely how a health insurer is working to control costs without degrading the quality of care – and how that impacted the final decision.

Senate Bill 719: Requires health insurance companies to comply with Oregon’s Unfair Trade Practices Act. Currently, health insurance companies are exempt from Oregon’s signature consumer protection law (yes, it’s true). If you need more evidence of why we need this, check out this awful story about a woman, her injured husband, and Regence Blue Cross Blue Shield.

If you haven’t done so already, now is an important time to email your State Senator in support of these bills.