Excellus Seeks Premium Increases From N.Y. for Small Business Health Plans

Copyright 2010 A.M. Best Company, Inc.All Rights Reserved BestWire

August 26, 2010 Thursday 03:56 PM EST

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Excellus Seeks Premium Increases From N.Y. for Small Business Health Plans

Fran Lysiak

ROCHESTER, N.Y.

Excellus BlueCross BlueShield is seeking premium rate increases of up to 12.5% on health insurance plans for small businesses.

Commercial community-rated products in the Rochester region would see rate increases ranging from 9.5% to 12.5%, Excellus said.

In New York, every employer with 50 or fewer employees must be community-rated, which means their claims experience is pooled and divided among all of the members to keep premiums affordable, said Jim Redmond, a spokesman for Excellus. Excellus is the largest health insurer in upstate New York, with about 1.7 million members.

Less than 20% of the company's business is community-rated, he said. Other members are either in self-funded health plans or experience-rated plans, Redmond said.

Excellus is continuing to see more people using health care services, as well as higher payments for those services, which combined are driving the increased cost of coverage, Redmond said.

Under a law signed in June by Gov. David A. Paterson, New York State health insurance plans must submit premium increases for review and approval. The law returned prior approval of health premiums to state insurance regulation for health insurers and health maintenance organizations (BestWire, June 11, 2010). Since 2000, the state had implemented file-and-use. The New York insurance department has the authority to review rate applications and their underlying calculations and may approve, modify or reject them.

Health plans need to file by Sept. 1 in order to give the department at least 60 days to look at their filings, he said. Excellus' goal is to have the rates approved and in place for Nov. 1, so they could take effect on Jan. 1, he said.

The department received the company's filing and is entitled to take 60 days to review it, said Ron Klug, a spokesman for the New York insurance department. "We will no doubt be getting back to Excellus in October."

Redmond said that in upstate New York, coverage costs less than the national average "but we are not immune to the national trends in health care costs." Baby boomers are continuing to grow older and can access new drugs and advancements in medical technology and procedures, he said.

People also are living longer and surviving diseases such as cancer or events such as heart attacks in greater numbers "but all of those medical miracles come with a price," Redmond said.

As for the new U.S. health care reform law, "like every health plan, we are looking at how we will put the new mandates into operation and trying to assess what the costs of all those new mandates will be," Redmond said.

The proposed changes would take effect Jan. 1, 2011, pending approval from the New York State Department of Insurance.

Excellus Health Plan Inc. currently has a Best Financial Strength Rating of B++ (Good).

(By Fran Matso Lysiak, senior associate editor, BestWeek: [email protected])

August 27, 2010

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