PROVIDENCE – Health insurance rates for larger groups covered by Blue Cross & Blue Shield of Rhode Island will rise an average of 8.1 percent for renewals starting Oct. 1, while those covered by UnitedHealthcare of New England will pay 8 percent more overall, based on rulings announced by Health Insurance Commissioner Christopher F. Koller.
The large-group rates – affecting groups of 51 or more – affect about 400,000 subscribers, he said. Small-group and individual rates have been subject to state review for years, but this is the first time that large-group have also been scrutinized, he noted.
“This means that the insurers have to demonstrate their numbers are sound, that they are working to make coverage more affordable and that they are improving Rhode Island’s health care system,” Koller said in a Wednesday statement. “We have to keep them focused on affordability and the underlying cost drivers.”
The insurers filed requests for approval of large-group administrative expenses, contributions to reserves and increases in medical cost trends for in- and outpatient hospital, physician and prescription services, the main factors that determine by how much employers’ premiums go up each year, and Koller’s office reviewed them to ensure that they are consistent with the insurers’ proper conduct of business and in the interests of the public.
Blue Cross had sought an overall 9.4-percent increase, based on a 9.4-percent medical cost trend increase and an allocation of 11.5 percent of the premium to administrative costs and 2.35 percent to reserves. Koller reduced the contribution to reserves to 1.35 percent and the allowed medical cost trend to 9.1 percent.
UnitedHealth had sought an 11-percent increase, including a 10.7-percent medical cost trend increase, 17.7 percent of premiums devoted to administrative costs, and a 3.2-percent contribution to reserves; Koller reduced the allowed medical cost increase to 9.9 percent and the contribution to reserves to 1 percent, and set conditions for the administrative cost allocation.
Within 180 days, UnitedHealth must file a report detailing how it is addressing concerns about its treatment of Rhode Island health care providers, and it must direct resources to improve the quality, accessibility and affordability of the state’s health care system. Any financial contributions are to be commensurate with UnitedHealth’s fully-insured commercial market share.
“With the conditions placed on this approval, United is acknowledging the need for meaningful positive change in its relationship with the providers of Rhode Island,” Koller said. “Further, United is also making a commitment to investments to system improvements that might otherwise be hampered without their participation.”
The adjustments to the insurers’ proposed rates will save employers an estimated $15 million to $20 million per year, compared with costs under the two companies’ initial rate-hike requests, he said.
Blue Cross & Blue Shield of Rhode Island, based in Providence, covers more than 670,000 customers statewide. BCBSRI is an independent licensee of the Blue Cross and Blue Shield Association. Additional information is available at www.bcbsri.com.
UnitedHealth Group (NYSE:UNH) is a diversified health and well-being company based in Minneapolis, Minn. It offers a broad spectrum of products and services through six operating businesses – UnitedHealthcare (parent of UnitedHealthcare of New England), Ovations, AmeriChoice, Uniprise, Specialized Care Services and Ingenix – serving about 70 million individuals nationwide. Additional information is available at www.unitedhealthgroup.com.
The R.I. Office of the Health Insurance Commissioner was established by legislation in 2004 to broaden the accountability of health insurers operating in the state of Rhode Island. For more information, go to www.ohic.ri.gov.