Sifting through the opposing rulings on the legality of the subsidies on the federal health insurance exchange.
Rhode Island's health insurance commissioner has ruled that Blue Cross & Blue Shield of Rhode Island can raise premiums on its direct pay plans for individuals by an average of about 7%. That's less than the average 10.2% premium rate hike the state's dominant health insurer sought and which drew public opposition during hearings last month.
Commissioner Christopher F. Koller said the terms of a stipulation of settlement reached between Blue Cross and the Office of the Attorney General "inadequately addressed" Blue Cross' obligations, according to a statement from his office.
State Attorney General Patrick Lynch thought a rate hike of 9.5% was more appropriate than the 10.2% Blue Cross requested, John Cogan, executive counsel with the Rhode Island Office of the Health Insurance Commissioner said in January (BestWire, Jan. 22, 2010). Cogan also served as hearing officer in this case.
According to Koller's office, the average rate increase was reduced to 9.5%. But the commissioner also directed Blue Cross to eliminate costs to the direct pay product for some state-administered medical services and for the state premium tax. His office estimates this would reduce the average rate increases to about 7%.
The way of allocating the costs of state-administered medical services to the direct pay products was only an estimate, Koller ruled. In rejecting the allocation of the state premium tax to subscribers, "the premium assessment adversely affects the affordability of the direct pay product," Koller said.
Direct pay are individual and family health insurance plans for people who don't have access to insurance through their employer. Blue Cross is the only carrier in the individual market in Rhode Island, covering about 14,000 people.
Blue Cross may accept the decision or appeal it in court. Several attempts to reach Blue Cross for comment weren't successful.
In November, when the health insurer filed for the increase, it blamed mostly rising health care costs as the reason. The company said it sought a rate increase of 5.9% in 2008 on the direct pay plans, but was denied any increase (BestWire, Jan. 22, 2010).
"Rate review alone won't make health insurance affordable," Koller said. "Next year with this review, we will again be faced with a bad set of choices."
Reforms, such as changes in how providers are paid, and subsidies, are needed, "particularly for low- and moderate-income insurance consumers who have no employer to assist them," he said.
The new direct pay rates are to take effect April 1.
(By Fran Matso Lysiak, senior associate editor, BestWeek: firstname.lastname@example.org)