Health Insurance Commissioner Christopher F. Koller took on his first rate hike request last week, a bid by Blue Cross & Blue Shield of Rhode Island to increase its Plan 65 Medicare supplemental coverage premiums by 14.58 percent, effective Nov. 1.
Until now, the R.I. Department of Business Regulation had overseen health plans’ rates, but a law last year that created Koller’s post changed that, as well as the factors to be considered.
While the DBR’s role was to guard the health plans’ solvency while ensuring rates weren’t excessive or unfairly discriminatory, Koller must also consider how rates will affect providers and direct health plans toward policies that promote the common good.
For Blue Cross in particular, another 2004 law also changed the rules, adding a requirement “to provide affordable and accessible health insurance” to a range of consumers. Based on that law, the DBR last year rejected a 16.9-percent hike in Blue Cross’s individual rates.
The new request is for “Medigap” coverage – insurance to cover Medicare co-payments for hospitalization, doctors’ visits and other services and, under the more common Plan 65 C, also deductibles, foreign travel emergencies and skilled nursing facility co-pays.
About 21,600 Rhode Island seniors are on Blue Cross Plan 65, which now costs $93.40 a month for the basic coverage, $145.50 for Plan 65 C, or $91.01 per month for a “Select” plan with a restricted provider network. (Blue Cross & Blue Shield of Massachusetts charges $77.54 and $138.41 per month for roughly comparable plans.)
But increasingly, the Rhode Island insurer says, seniors are opting for Medicare Advantage instead, managed-care plans in which Blue Cross administers a person’s Medicare benefits and enhances the covered services. One such plan, which has become “very popular,” costs nothing above the standard Medicare premiums.
Blue Cross last raised its Plan 65 “Medigap” rates in 2003, by 5 percent, and since 2000, rates have only increased one other time, in 2001, by 9 percent. Last year, however, Blue Cross says, it became clear that medical costs were rising rapidly, and a new hike was needed. The company says a 22-percent hike would be warranted, but it’s seeking only a 14.58-percent hike for this year, to ease the burden on subscribers, and it will seek another hike next year.
At a hearing Monday, however, Lt. Gov. Charles J. Fogarty argued that seniors simply can’t afford that hike – especially since their regular Medicare premiums already rose by 17.4 percent this year and will rise by another 13.2 percent in January.
“Most Rhode Island seniors are not wealthy,” Fogarty said, noting that 14 percent live under the federal poverty line, and the average retiree gets only $923 a month from Social Security. Citing the 2004 reforms, Fogarty argued that Blue Cross was failing to meet its requirement to provide affordable coverage, and asked that Koller “moderate” the size of the hike.
Assistant Attorney General Genevieve M. Martin also argued for a smaller increase, saying that while Blue Cross’s hike request was actuarially justified, it could be reduced by offering more modest benefits to employees, for example. She suggested a 12.06-percent hike instead.
Blue Cross countered that its Medicare Advantage plans already provide a more affordable option for seniors, and that it’s particularly difficult to control costs with Medigap because the federal government, not Blue Cross, sets all the policies and payment rates.
The company has requested a decision by the end of the month, and Koller said his office will be “working hard” to provide it.
