WARWICK – The first salvo in the war of words over the request by Blue Cross & Blue Shield of Rhode Island to increase its rates 8.1 percent for its direct-pay customers was fired Jan. 21 by R.I. Attorney General Peter F. Kilmartin, who said that the rate hike should be rejected, because only an overall increase of 0.4 percent could be justified.
Kilmartin released a statement that laid out his objections, including the fact that while BCBSRI employees on average pay 4 percent of their health care insurance, many of their subscribers must pay at least 20 percent of the cost of health coverage.
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“Blue Cross should … tighten its own belt before it asks its subscribers for rate increases,” Kilmartin said.
In its own statement, BCBSRI defended its request, saying that while during these difficult financial times, any rate increase may appear unwarranted, the rate increase is justified, because it is the increase “in health care costs that causes us to request rate increases each year.”
Last year, Blue Cross sought a 10.2 percent increase, which was reduced to 9.5 percent increase in a stipulated settlement issued Feb. 2, 2010. BCBSRI direct-pay plans cover more than 14,500 individuals who are not eligible for health insurance through an employer, Medicare or Medicaid. BCBSRI is the only Rhode Island health insurer that provides coverage to this group.
Direct-pay plans are the only current option available for many of these Rhode Islanders until 2014, when the federally mandated health exchange programs will kick in under national health reform. If approved, the new direct pay rates will go into effect on April 1, 2011.
Among the reasons for rejecting the increase, the attorney general said, based on analysis by an independent actuary, were:
- BCBSRI arbitrarily selected trend factors for its projected health care costs that were higher than actual facts.
- Direct-pay customers were being charged excessive Blue Cross administrative costs.
- Blue Cross was inappropriately charging direct-pay customers for state assessments and taxes, as well as adding inappropriate charges to bolster its reserves.
One direct-pay customer, Carolyn Proulx, who testified Jan. 21 before the R.I. Public Utilities Commission, began by asking if anyone in the room had ever been a direct-pay subscriber for health insurance. No one had.
“I thought it behooved me to come and put a face on the direct subscribers,” Proulx said, according to the transcript. “I’ve been paying for my own health insurance a good many years, and no one wants to pay more. I hope you will not grant the raise simply because it hurts. It really hurts to write that check every month. I think there should be a better way. I just figured I would come as a good citizen and say I object.”
The public hearing will continue on Feb. 3 beginning at 9:30 a.m. at the R.I. Public Utilities Commission headquarters at 89 Jefferson Blvd. in Warwick.
