Published: September 19, 2011
Wilkes-Barre
Times Leader
Hearings eyed for Blue Cross
The insurer looks at rate hikes for the plans used by lower-income customers.
By Steve Mocarsky
As Blue Cross companies across the state seek increases in health insurance premiums from their poorest working customers, healthcare advocates are seeking hearings to determine if those increases are really necessary.
Blue Cross of Northeastern Pennsylvania is seeking approval from the state Department of Insurance for a 4.9-percent rate increase for its Special Care policy subscribers for 2012 as well as permission to add a $25 co-pay for diagnostic services.
Special Care is a health insurance plan designed for low-income individuals who earn too much to qualify for Medicare. Current monthly premiums range from a low of $130.78 in Northeastern Pennsylvania to $192.44 in Central Pennsylvania.
After a funding agreement between the state and the Blues for adultBasic – the most affordable healthcare plan at $36 per month – expired in February, Gov. Tom Corbett suggested low-income earners switch to Special Care.
Antoinette Krause, project director of the Pennsylvania Health Access Network, cited data from the state Departments of Public Welfare and Insurance that showed that of 37,588 former adultBasic enrollees, only 4 percent (1,513) were eligible for Medical Assistance, while 34 percent (12,814) enrolled in Special Care. Nearly two-thirds are now uninsured because they can’t afford Special Care.
After Highmark – a Blue Cross company serving Central and Western Pennsylvania – announced in August its intent to seek a 9.9-percent rate increase for Special Care subscribers, PHAN submitted a list of 3,000 names of people to the state Insurance Commissioner urging him to hold a public hearing to investigate Highmark’s plan.
Around that time, Highmark withdrew the request for a 9.9-percent increase and lowered it to a 4.9-percent increase.
“We believe Highmark’s attempt to avoid a hearing by lowering its request underscores the need for meaningful hearings,” Krause said. “Highmark appears to create numbers without justification or reason. At the very least, people struggling to keep their health insurance have a right to know if the rate increase is needed.”
Lance Haver, of the Philadelphia Mayor’s Office of Consumer Affairs, said during a recent conference call with Krause that the Blues cite rising administrative costs as one reason for rate increases, but that doesn’t add up because the companies laid off numerous employees at the end of 2010.
“Why was there an increase in administrative costs if you’ve just laid off workers? We suspect they want the increase because they want to buy Delaware’s Blue Cross or just increase their surplus,” Haver said.
Haver also suspects that when seeking permission for a rate increase from the Insurance Department, the insurance companies provide cost numbers based on “incurred claims” from health care providers rather than on the amount of money they actually paid out.
Haver also said he believes the $61 million it would have cost the Blues to fund adultBasic this year was already worked into the rates of other policyholders whose premiums helped subsidize adultBasic, so the Blues would see a “windfall.”
Anthony Matrisciano, Blue Cross of Northeastern Pennsylvania spokesman, said the company subsidized adultBasic with its surplus funds, which, he said, do not come from premiums, but from investment income.
Matrisciano said that in 2010, Blue Cross of NEPA requested a 15-percent increase for Special Care premiums in 2011 and was approved for a 9.9-percent increase. But to cover the costs of the plan, the company would have needed an 84.3-percent increase in premiums.
“We expect to use $3 million from our surplus this year to make up that difference,” he said.
Rosanne Placey, press secretary for the state Department of Insurance, said her office actually received Highmark’s amended filing for a lower rate increase the day before the office received the petition from PHAN. She said the department had been “working behind the scenes” with Highmark to lower their rate increase.
Placey said if the insurance commissioner agreed to have public hearings on the rate requests, he would have to recuse himself from final say in the matter. She said the deputy commissioner could choose to hold hearings. She said it would be premature to have hearings now and better to “wait and see what comments come in” from the public.
Placey said it’s good that PHAN is keeping the health insurance debate “in the public eye,” but pointed out that adultBasic was a heavily subsidized program. “I don’t see a $36 plan coming back. There are no means for the state to underwrite such a program,” she said.