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By Richard Asinof
WARWICK – A public hearing on the rate request by Blue Cross & Blue Shield of Rhode Island for its Direct Pay health insurance plans was held on Jan. 17 in the hearing room at the R.I. Public Utilities Commission.
It began with two Direct Pay customers, Richard A. Bell of Greenville, and Edward Gaul of Westerly, decrying the rate increases being sought by Blue Cross from those who can least afford it.
For Bell, a 62-year-old former production manager who is unemployed, the requested rate hike will cost an additional $1,552 in premiums, raising the total cost of health insurance for he and his wife to about $16,700 a year.
“My group will get a 10.3 percent increase,” Bell said. “How would you like to deal with that while you’re out of work?”
More worrisome to Bell were the changes that Blue Cross is proposed for coverage and services: a 50 percent increase in his deductible, a 43 percent increase in his pharmacy co-payments, and a 50 percent increase in the maximum out-of pocket expenses.
In addition, under the proposed new plan, Bell will have to pay for diagnostic radiology and diagnostic laboratory services as well as surgery in a doctor’s office until his higher deductible is covered. After that, Blue Cross will only pay 80 percent for these services all of which had been previously covered.
Direct Pay customers are individuals who do not receive health insurance through an employer and are not eligible for health plans under Medicare or Medicaid. Currently, there are about 14,500 customers enrolled in the Direct Pay plans, which is only offered through Blue Cross.
When the R.I Health Benefits Exchange begins operation in October 2013, consultants estimate that the actual market for Direct Pay customers may grow to be as large as 70,000.
In its position statement at the hearing, Blue Cross said it did not take the need to increase rates lightly in these difficult financial times.
Blue Cross blamed the need to raise its rates on the increasing costs of healthcare services. On average, more than 85 percent of premium dollars for health insurance pays for claims expenses, it said.
“It is commonly perceived that individuals in the Direct Pay market pay more in premiums than those in the group market. That is not true,” the insurer said.
The R.I. Attorney General’s office, an intervener in the rate case, said it was opposed to the requested rate increases in its statement at the hearing. Based on its own independent review of Blue Cross’s rate filing, the Attorney General’s expert consulting actuary recommended an average decrease of 5.1 percent.
“The rates requested by Blue Cross are neither affordable nor actuarially justified, and are not consistent with either the proper conduct of its business or the interest of the public,” the Attorney General’s said.
In addition, the Attorney General said it was inappropriately including in its rate increase request a provision for premium taxes, contrary to rulings by R.I. Health Insurance Commissioner Christopher F. Koller for the past two years.