Health Insurance Commissioner Christopher F. Koller, who earlier this month put a halt on health care reform-related surcharges that carriers were adding to quotes for policies effective Oct. 1 or later, has now authorized charges of 0.6 to 2.25 percent for two of the three commercial carriers.
The federal reform law requires health plans issued after Sept. 23 to cover dependents through age 26, provide certain preventive services at no cost to members, and impose no lifetime limits on benefits, among other requirements.
To cover the extra cost of these changes, Blue Cross & Blue Shield of Rhode Island had started adding 1.8 to 3 percent to its rates in quotes for renewals and new policies effective Oct. 1.
Tufts Health Plan told Providence Business News that it planned to add 2 percent to its own rates effective Oct. 1, but a spokeswoman this week said no quotes were actually sent out with the surcharge.
Neither had sought approval from Koller, even though state laws and regulations require his OK for any rate changes. Koller became aware of the situation through a PBN inquiry, and he promptly sent a letter to all three commercial carriers, warning that surcharges could not be imposed without his approval.
UnitedHealthcare of New England filed a request for rate hikes of 0.6 to 1.1 percent to cover the cost of enhanced preventive-care coverage – more or less depending on the current terms of each plan.
Blue Cross applied for a 1 percent hike to cover the preventive-care expansion and another 2 percent for the extended dependent coverage.
Tufts did not submit any request, but spokeswoman Patti Embry-Tautenhan said the insurer is “still working on the calculations and will likely file next month.”
Koller approved United’s request, and he gave Blue Cross the full preventive-care hike, but only 1.25 percent for the dependent coverage. All three carriers had already gotten approval for substantial rate hikes for this year, 6 to 9.9 percent, and for more hikes effective next Jan. 1.
For a small business covered by Blue Cross, this means base rates will go up by 12.05 percent. On a family premium priced at $13,770 per year – the U.S. average in 2010, according to a recent Kaiser Family Foundation report – that means a total hike of $1,659, including $310 for the reform surcharge alone.
But as Koller noted in a news release, the benefits expansions “are real and come with small costs that can be estimated and compared.” The advantage for Rhode Islanders, he added, is that “we have a comprehensive rate oversight process to ensure these costs are fairly calculated and applied.”
Blue Cross will have to reprice any policies it had already issued for October and November with the higher surcharge, Koller said, and it will have to provide rebates to any employers who had paid unapproved rates.
In general, Koller said, insurers should simplify and clarify the disclosure of their prices to brokers and businesses. Currently, he said, his office “receives too many calls from businesses that do not understand the basic facts they are entitled to about the price of their health insurance policies.”
In a separate decision, Koller approved rate hikes for Blue Cross Medicare supplemental insurance policies (sold as Plan 65), which the carrier provides to 18,700 seniors in the state. Effective next Feb. 1, rates will go up by an average of 9.9 percent for “Plan C” subscribers – 60 percent of the total – and 7.6 percent for “Select Plan C” subscribers, he said. Blue Cross had sought hikes that were about 1.25 percentage points higher.
“While we reduced the filing, Medicare Supplemental Insurance products and their enrollees are subject to the same underlying medical cost inflation as the rest of the population,” Koller said.
