Blues plans see pushback on rate hike requests

Regulators are hearing plans say they need to raise premiums because economic times are tough -- the same reason consumers argue rates should be lower.

By Emily Berry — Posted May 14, 2009

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Blues plans across the country are asking for premium increases on both individual policies and group coverage, which they argue are needed to sustain the companies in tough times.

But state insurance regulators have tough times in mind, too, and customers are begging them for a break.

Hawaii Insurance Commissioner J.P. Schmidt said he is used to hearing complaints about the increases requested by Hawaii's Blues plan, Hawaii Medical Service Assn. But this year he's seen a rise in the number of people asking him to reject the Blues' proposed new rates.

In 2008 he bumped the plan's rate hike for small businesses from a requested 12.8% to 10.4%. But this year, the request for a small group rate increase is an average of 12.7%. If approved, the increase would be the plan's highest in 20 years.

Under state statute, the insurance commissioner, in deciding to approve or deny a rate increase, considers whether the increase is excessive, inadequate, or discriminatory, Schmidt said.

"We have to explain to people that we cannot hold down a premium rate based on people's ability to pay," he said.

He has until early June to approve or reject the request.

Portland, Ore.-based Regence BlueCross BlueShield has asked Oregon regulators to approve a 19% premium hike for its individual policyholders. Insurance department spokeswoman Cheryl Martinis says that regulators received an unusually high 1,191 written comments to the state.

As many as 800 were form letters that appear to have originated with a consumer group, she said. The general theme, Martinis said, was "the rate increase is unfair and unreasonable given the economy." The public comment period ended April 3 and a decision had not been made on the rate hike as of this article's deadline.

Blues plans in Rhode Island and North Dakota have already been turned down for rate hikes over the past year.

Meanwhile, Blue Cross Blue Shield of Michigan says it has lost money on its individual policies and is asking for a nearly 56% rate hike. u

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