Wednesday, June 24, 2015

Oregon Health Insurer Giant Moda Having Problems; Oregon Insurance Division Bailing Them Out with Rate Payer Money?

MaxRedline has an interesting post on the Oregon Insurance Division refusing to allow Oregon health insurance providers to reduce their rates. In fact its preliminary determinations are forcing two providers to charge almost $60/month more than they want to charge.

Health Net wanted to charge a $240 monthly premium for its silver plan for a 40 year old. Zoom, a new provider, wanted to charge $233 per month for its silver plan. But the Oregon Insurance Division has given a preliminary determination that Health New will have to charge $297/month and Zoom will have to charge $291/month for the silver plan.

Why is the Oregon Insurance Division asking health insurance providers to charge more than they think is necessary? The Oregonian reports that state regulators are doing it to keep the health insurance industry "stable".
"State Insurance Commissioner Laura Cali said that while her job is to make sure consumers are not overcharged, she also has to ensure rates cover insurers' costs. Otherwise, predatory pricing could over the long term drive some companies out of the market. She said that Oregon is likely to still enjoy better rates than other states thanks to one of the most competitive markets in the country.

"Pat Allen, director of the state Department of Consumer and Business Services, said 'We need to ensure a market that long term is stable, competitive and ensures pricing that is much closer to the cost of delivering health care.'"
Zoom is new to Oregon, and Health Net covers only about 1,000 individual policy buyers out of an Oregon market of over 220,000. But, do state regulators know more about running stable long term health insurance plans than Kaiser Foundation Health Plan or Providence Health Plan who insure about 1/5th of Oregon's individual plan market? Kind of doubtful.

So, why would Oregon health insurance regulators ask Kaiser and Providence to raise their proposed rates $26/month ($271 instead of $245/month) and $27/month ($284 instead of $257/month)respectively?

Maybe to help other insurers stay in business who have not made wise decisions?

Moda, Oregon's biggest insurer with 46% of the Oregon individual market is asking for a 25.6% monthly premium raise from $245/month to $307/month. It took a big loss in 2014. It expected claims and administrative costs to equal 99% of premium income. But, instead they equaled 165% of income. Ouch!

Then there is LifeWise Health Plan which serves a tenth of Oregon's individual health care insurance market asking for $318/month (a 38.5% premium increase) in 2016.

Where were the wise state regulators on higher premiums bringing stability when they approved Moda for second lowest premium $221/month in 2014 and LifeWise for lowest premium $222/month for 2015? If $222/month is fine this year, why shouldn't $233 or $245/month be fine in 2016?

Could it be that the state regulators like Laura Cali and Pat Allen are really trying to shield big players like Moda and LifeWise from their bad business decisions? Two years into ACA coverage they aren't doing well. They insure 56% of the Oregon individual market. Too big to fail so all the individual plan premium payers of the other providers have to cough up increases too?


MAX Redline said...

Well-stated, TD (and thanks for the linkiness) - it seems pretty clear to me that Laura is, in fact, trying to shield Moda, but in order to apply a patina of "fairness" she has to bring in LifeWise as well. Otherwise, it'd be too obvious.

Kaiser wanted to reduce premiums by a little over 2%, but Laura insists that they need to raise them by over 8%. And even an egotistical little Millennial like her is probably aware of the fact that she knows less about the health care biz than a company that's been delivering health care since the days of the Kaiser shipyards.

T. D. said...

You're right, Max. There's not even a fig leaf in their reasoning given that just last year they thought $222/mo was a reasonable rate. Either they admit they they were fools then or are duplicitous now.

MAX Redline said...

Given that it's Oregon, I'll take "duplicitous" for $500, Alex.

T. D. said...

It's the daily double, Max. You win the round. :-)