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Oregonians with spendy individual and small-business health insurance plans are again facing double-digit increases.
It could be worse.
More than at any time in the past year, the Oregon Insurance Division has pushed back on several rate increases sought by the state's largest insurers, trimming them from anaverage 16 percent to 12 percent.
That's still a high jump, consumer advocates note. But the 4-percentage-point reductions speak to a noticeable shift in rate regulation, they say, and have been imposed on plans from the state's largest providers covering nearly 92,000 people.
The development reflects the closer scrutiny all states are supposed to be giving insurance rates under federal health care reform, though Oregon appears to be ahead of the curve, advocates say. Within 18 months, all insurers must show they spend 80 to 85 percent of consumer premium payments on medical care or quality improvements, under this year's Affordable Care Act.
State Insurance Division Administrator Teresa Miller said her agency is using the authority given her by Oregon lawmakers in 2009 to lower costs for consumers.
Under rules that took effect in April, Miller's agency can now take an insurer's profitability, reserves and investment income into account as it reviews rate requests. Since insurers' profits and earnings have improved this year, she said, the division wants consumers to benefit, too.
Essentially, the division is telling insurers that "because you have a surplus and because you are more profitable overall, we're going to give consumers a little break in these markets," Miller said in an interview this week.
Most insurers say they continue to lose money on the policies -- particularly individual coverage -- and will have to dip into reserves or other more profitable businesses. They say that can't go on for long without risking their stability.
"You can't keep pushing our liabilities out in the future," said Jared L. Short, president of Regence BlueCross BlueShield of Oregon, the state's largest carrier. "We have a lot of examples in this state of what that does."
The division's new posture comes in the wake of federal health care reform that adds slightly to the cost of insurance, but mandates changes that could make insurance more affordable in the future, experts say.
It also comes as the state takes steps designed to give even more scrutiny to rate requests. In August, the division got a $1 million federal grant to improve its rate review process by adding staff and studying ways of improving its reviews. It recently gave the Oregon State Public Interest Research Group, a consumer advocacy group, $100,000 to independently review and comment on rate increases, division spokeswoman Cheryl Martinis said.
"It's good to see the insurance division pushing back a bit," said Laura Etherton, OSPIRG's health policy advocate.
The reductions likely won't satisfy consumers, however, who since 2008 have been able to view rate requests and decisions through the division website and this year were allowed to submit comments.
"Any consumer can tell you the costs are still too much," Etherton said. Premium increases also don't account for other plan changes, including higher co-pays or reduced coverage, she said.
The real culprit in need of reining in is the increasing cost of medical care, insurers say.
The division regulates rates only for individual, small-group and portable health plans covering about 475,000 Oregonians. That's about 13 percent of all Oregonians with health coverage.
Still, the markets it oversees have been rocked with large premium increases. Small group rates have jumped by at least 10 percent each year since 2005, division figures show. Rates for individual policies increased 17 percent each of the past two years. Insurance rates for large employers aren't regulated by the state, but they haven't increased as significantly.
Since July 2009, insurers have sought approval from the division for 73 rate increases. The division approved lower rates on only 13 occasions, according to an analysis by The Oregonian.
But it's lowered five requests since Sept. 28, records show. Regence, Providence Health Plan, ODS Health Plans Inc., Health Net and American Family Mutual Insurance Co. had requests trimmed by the division. All but Health Net indicated they would lose money on the plans.
"We're convinced the division will need to return to more traditional evaluation of actuarial calculations," said Jonathan Nicholas, spokesman for ODS. The insurer sought a 20.7 percent increase for individual policies but got 17.5 percent.
Providence Health Plan sought an 18 percent increase for individual policies covering 10,000 Oregonians. The division approved a 13 percent increase. Providence spokesman Gary Walker said the insurer gave up its 2 percent profit margin but also has seen claims costs improve.
Miller said the division thinks insurers, for now, have the financial muscle to cover losses on individual policies with profits from larger insurance groups.
"Essentially we're saying you have to subsidize this market with a more profitable line of business, at least over the short term," Miller said.
Miller's tougher stance drew compliments from one division critic, Carol Simila, who follows rate cases and previously worked for the division as a consumer advocate.
"I think she's willing to ask the tough questions, whereas in the past, it was, 'we're not going to go there,'" Simila said.
Insurers say they are working to recommend to Miller how to make individual insurance policies more affordable before 2014, when all adults must be guaranteed coverage.
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