RI Reacts to Health Insurance Rate Increases
Thursday, July 08, 2010
The increase in health insurance rates came as yet another hit to recession-weary Rhode Islanders yesterday.
Health Insurance Commissioner Chris Koller announced he had approved hikes for the three major insurance carriers in Rhode Island, ranging between 8.4 and 12.3 percent. The decision will affect those 35 percent of Rhode Islanders who receive their health insurance through their job, according to Koller.
Yesterday, candidates for state office spoke out on the increases and offered their own solutions for fixing the problem. Click here to read more.
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLASTFor small businesses and other employers with 50 or few employees the rates will go up as follows: 9.8 percent for Blue Cross and Blue Shield of Rhode Island, 12.3 percent for United Health Care, and 11 percent for the Tufts Health Plan. For larger businesses and other employers, the rate increases are: 9.8 percent for Blue Cross Blue Shield, 8.4 percent for United Health Care, and 10.2 percent for Tufts.
The new rates will take effect in 2011.
In every case, Koller approved an increase—but did not give the insurance companies as much as they asked. For example, Blue Cross and Blue Shield wanted to raise rates on small businesses by 12.4 percent, United Health Care asked for 15.5 percent, and Tufts Health Plan requested 12.4 percent.
“My job is to not let them pass on every increase on the consumer and create enough price pressure so they have an incentive to go back and change things,” Koller told GoLocalProv.
How Will You Be Affected?
Exactly how the rate increases affect individual Rhode Islanders will depend on how their employers decide to pass on the costs. On average, workers who get health insurance through their job share 20 percent of the cost with their employer, according to the health insurance commissioner. He said some businesses may change the benefits their offer—or move to a new insurance plan.
In making his decision, Koller said he tried to balance the costs on consumers with the need of insurance carrier to cover their losses with higher prices. Blue Cross and Blue Shield, for example, lost $100 million in 2009.
Some may ask why Koller didn’t take a stronger stand against the insurance companies, but he said that approach has not worked in other states like Massachusetts, where a flat-out denial in requested rate increases has led to lawsuits.
Why Are Costs Going Up?
“We’re trying to direct the contracting process in a direction as opposed to just saying no—and there’s no evidence that saying no works,” Koller said.
Koller pinned the increased on the rising costs of medical care.
“The data presented to OHIC is and available for the public to see is clear – health insurance is expensive because medical care is expensive,” Koller said. “Health plans predicted rates of increase for hospital services alone of up to fourteen percent. Affordable rates of increase will not occur until we change the way our medical care is organized and delivered.”
In order to combat the problem, Koller issued six conditions that contracts between hospitals and health insurance companies must meet. These include annual maximum price increases for services and standards for administrative efficiency.
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