Report: Health Insurance Rate Watch Project

Comment on Moda Health Plan's Proposed Individual Health Insurance Rates

Released by: OSPIRG Foundation

Executive Summary   

Moda Health Plan—formerly known as ODS Health Plan—has proposed premium rates for its individual and family plans for 2014. Moda’s proposed rates are the lowest filed for an insurer in Oregon’s Individual market.

Thanks to a new law requiring all Oregon insurers to offer standard plans, it is now possible to compare proposed rates apples-to-apples across Oregon’s insurers for the first time. In our analysis of this and other filings, we examine the premium proposed for one of these standard plans, the Oregon Standard Bronze plan for a 40-year-old nonsmoker in the Portland Metro area. This allows us to make meaningful comparisons across insurance companies. 

Moda Health Plan is proposing a rate of $169 for this benchmark plan.  

While Moda’s product is inexpensive relative to the competition, it remains critical to examine the justification for their rate. In the coming competitive marketplace of Cover Oregon, the state’s health insurance exchange, it is likely that many cost-conscious consumers will be attracted to the cheapest product available, and rate review has an important role to play in making sure that the rates those consumers experience are fully justified, sustainable, and not inflated or wasteful.

Oregon’s health insurance rate review program, administered by the Oregon Department of Consumer and Business Services (DCBS), serves as a critical backstop to protect Oregon individuals and families purchasing coverage on their own from paying unreasonable premium rates.

With federal health reform bringing important new consumer protections into effect in 2014, many more Oregonians will be able to access coverage, and health insurance benefits and out-of-pocket costs will change substantially for many Oregonians. In addition, insurers will no longer be allowed to deny coverage to people with pre-existing conditions, and many Americans will be required to have health coverage or pay a penalty. These changes make it more urgent than ever to ensure that premium rates are justified, and that consumers receive good value for their premium dollar.

OSPIRG Foundation worked with the actuarial firm AIS Risk Consultants to analyze Moda’s rate filing. We examined the insurance company’s justification for the proposed rates, the financial position of the insurer, and how the proposed rates would impact Oregonians if approved. Our staff and consulting actuary also reviewed additional information made available by Moda.

After careful analysis of Moda’s initial filing and the supplemental information provided, we are concerned that the insurer has not provided sufficient information to evaluate the justification for their proposed rate.

Key Findings:

  • We are concerned that Moda’s projection of a 5.2% trend for medical costs has not been justified by the documentation provided. With a number of major national studies demonstrating a substantial slowdown in health care cost growth in recent years, Moda’s projections deserve close scrutiny.
  • Moda failed to adjust its cost projections to reflect a reduction in “bad debt” due to the expansion of coverage as the Affordable Care Act (ACA) comes fully into effect. With hundreds of thousands of Oregonians newly eligible for coverage in 2014, uncompensated care is sure to decline, and this benefit should be passed along to consumers in the form of lower rates. Moda’s filing indicates a number of areas where ACA provisions may increase costs, but does not include this key area where reform will reduce costs.
  • When it comes to reducing costs and improving the quality of care, it is not clear that Moda is doing all it can. Moda reported taking steps to reduce health care cost in ways that improve quality for patients in only three of the six areas we track, and the insurer did not provide enough data to meaningfully evaluate its cost containment strategy.

Before deciding to approve or deny this rate request, we urge the Insurance Division to scrutinize the issues raised here, require Moda to provide all documentation necessary to evaluate their proposal, and to implement a concrete, achievable plan to contain costs for Oregon individuals and families.

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