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Comments on LifeWise Health Plan's Proposal for Individual Health Insurance Rates
LifeWise Health Plan of Oregon has proposed premium rates for its individual and family plans for 2014.
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.
LifeWise is proposing a rate of $195 for this benchmark plan.
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 LifeWise’s rate filing. We examined the insurance company’s justification for the proposed rates, the financial position of the insurer, and how the rates would impact Oregonians if approved. Our staff and consulting actuary also reviewed additional information made available by LifeWise.
After careful analysis of LifeWise’s initial filing and the supplemental information provided so far, we are concerned that the insurer has not provided sufficient information to evaluate the justification for their proposed rate.
- We are concerned that LifeWise’s projection of an 8.2% 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, LifeWise’s projection of accelerating cost growth deserves close scrutiny.
- LifeWise’s projections of an additional 15% increase in claims cost due to the health status and pent-up demand of the currently uninsured have not be justified. The exact cost impact of expanding coverage remains unclear, but the basis for LifeWise’s projections is unclear should be scrutinized closely. Some experts have predicted that covering the currently uninsured will prove to reduce costs, since many uninsured individuals are young and healthy, and incur few medical costs.
- LifeWise 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. LifeWise’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 LifeWise is doing all it can. LifeWise 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 LifeWise 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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