Informed consumers can be a powerful antidote to bad news about advisors who do wrong by their clients.
May 20--Almost like clockwork, the cost of health insurance for employers and individuals rises with regularity. Whether in higher premiums paid by a company for work force coverage or in higher deductibles and copays squeezed out of families, Pennsylvanians have become resigned to seeing their insurance bills go up.
They shouldn't be.
Take the higher rates that Highmark has proposed for 100,000 customers who buy health insurance directly from the region's largest provider. These subscribers are typically people with moderate incomes, who don't have employer-provided coverage and are not eligible for a government insurance program. In other words, they have to dig into their own pockets to buy coverage.
Based on applications submitted to the state Insurance Department, Highmark wants to raise rates in October for subscribers in its Direct Pay, Simply Blue and Complete Care plans. Depending on the plan, the premiums would increase by 4.6 percent, 7.5 percent or 9.9 percent.
All told, the higher rates would bring Highmark an additional $22.5 million a year. That's an extra $22.5 million for a presumptive nonprofit that made a profit of $444.7 million in 2011 and $462.5 million in 2010, is sitting on a $4.1 billion surplus and paid its most recent CEO $4 million a year.
While a decision on the filings has yet to be made, how could such price hikes on average customers be necessary? How could state regulators, in whose hands these proposals now rest, call them justified?
Unfortunately, Pennsylvania's insurance rate system is stacked against the public. For that you can blame the Insurance Department (a.k.a. the Corbett administration) and the General Assembly.
Here's what makes it anti-consumer, not just in regard to Highmark rate hikes, but all others as well:
--Although the state insurance commissioner can call a public hearing on proposed rate increases, it rarely happens. The last such hearing was 10 years ago.
--Policyholders and others have 30 days to submit written comments to the department on a rate proposal, but insurance companies are not required to answer their questions and there is no way to publicly cross-examine their representatives on the need for a price increase.
--The department, in ruling on rate hikes, does not issue a written decision or give the public a rationale for the increase. So rate hikes are routinely approved and the cost of health insurance keeps going up, but state officials never tell Pennsylvanians why.
Any health insurance company worth its ad budget would think twice about routinely raising rates if it knew it had to defend price increases in public by taking questions and facing scrutiny of its spending -- especially if it's a nonprofit.
But with Pennsylvania's state-sanctioned closed-door system of considering and approving rate increases, why wouldn't an insurer keep upping prices on customers to preserve its fat bottom line? And the fact that the Corbett administration and lawmakers of both parties tolerate a process that routinely victimizes the public makes them a party to the scourge of costlier health insurance.
This is not how it works in other states, but Pennsylvanians are used to their government operating in ways that are decades behind the times.
The obvious way to fix the system is to require the Insurance Department to follow a process like the one used by the Public Utility Commission on utility rate requests. Hold public hearings on proposed price hikes. Use a state advocate to represent consumers (as does Florida, Iowa, West Virginia and others). Allow discovery and cross-examination. Issue written public opinions on decisions to change rates.
Consumer groups including the Pennsylvania Health Access Network have consistently advocated for a level playing field, but state officials, by their inaction, favor a landscape tilted toward insurers. If Pennsylvania's elected leaders continue their failure to act, insurance companies will continue to amass rich profits and grand surpluses by picking the pockets of average Pennsylvanians.
(c)2012 the Pittsburgh Post-Gazette
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