Insurance premiums: More double-digit hikes sought in Rhode Island, Michigan and Connecticut

The bad press and government scrutiny endured by Anthem Blue Cross in Woodland Hills, Calif., and parent WellPoint Inc. over Anthem's efforts to increase some health insurance premiums by more than one-third aren't stopping other insurers from moving forward with plans to institute double-digit rate increases of their own. However, while most insurers across the country have targeted primarily individual policy-holders for the highest increases, health plans in Rhode Island are now bringing small-group and large-group commercial policies into the mix.

All three of Rhode Island's commercial health insurers have filed 2011 rate-hike requests for group policies, the largest coming from for-profit UnitedHealthcare of New England, reports the Providence Journal. UnitedHealth, a subsidiary of Minnetonka, Minn.-based UnitedHealth Group Inc., wants to increase premiums by 11.8 percent on average for businesses with 50 or fewer employees and by 15.5 percent on average for companies with more than 50 employees. (Interestingly, UnitedHealth filed the application at night.)

Nonprofit Blue Cross and Blue Shield of Rhode Island (BCBSRI) in Providence seeks average increases of 12.4 percent for small-group policies and 13.4 percent for large-group policies. Premium rates haven't been able to sustain the growth of medical claims costs, which totaled $1.5 billion in 2009 for BCBSRI, says Dr. Gus Manocchia, vice president and chief medical officer.  Hospital costs comprise 42 percent of claims and are "the most significant driver of rising health care costs," he tells the Providence Business News. Prescription drugs and outpatient services are the next most costly services.

Nonprofit Tufts Health Plan, based in Watertown, Mass., has requested increases that average from 11 percent to 12 percent (no small-group vs. large-group breakout provided).

UnitedHealth is currently in a strong financial position, posting net earnings of $1.2 billion on revenues of $23.2 billion for the first quarter ended March 31 of fiscal year (FY) 2010. However, both BCBSRI and Tufts recently announced significant financial losses. BCBSRI reported a $100 million loss for FY 2009, earning premium revenue of $1.7 billion vs. total expenses of $1.8 billion. Tufts reported a net loss of $51.9 million on revenues of $630.8 million for 1Q10. That loss included investment income of $7.1 million and a $59 million operating loss.

In the individual market, Blue Cross Blue Shield of Michigan (BCBSM) in Detroit has joined the throng of insurers targeting policyholders, asking state regulators for premium increases of 7.8 percent to 15 percent effective this October, reports the Detroit News. The rate increases would affect about 189,000 members. The nonprofit lost $94 million on individual plans in 2009 and expects to be in red ink for these plans to the tune of $40 million to $60 million in 2011 (even accounting for the rate hikes), say BCBSM officials. However, BCBSM earned overall FY 2009 net income of $12 million, and critics note that the insurer has about $2.4 billion in reserves that could be used to rein in premium increases.

Many state regulators are taking a hard look at premium increases proposed by insurers. However, in Connecticut, the state is driving the increases for some residents. State-managed Charter Oak Health Plan plans a June 1 premium increase for its 14,500 members, marking the second hike in 2010 alone for the sliding-scale plan. With the two increases combined, the lowest-income members will pay 72 percent more in premiums than they paid in January, reports the Hartford Courant.

To learn more:
- read these Providence Journal reports: article 1 or article 2
- read these BCBSRI releases: press release 1 or press release 2
- read this Providence Business News article
- read this press release on Tufts' 1Q10 results
- read this press release on UnitedHealth's 1Q10 results
- read this Detroit News article
- read this BCBSM press release
- read this Hartford Courant article

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