By Richard Asinof
PROVIDENCE – After more than three months of review, R.I. Health Insurance Commissioner Christopher F. Koller announced Monday his rate factor decisions for 2012 for Rhode Island’s three commercial health insurers.
UnitedHealthcare of New England, which has about 210,000 members in Rhode Island, saw the biggest reduction in its requested rates. The insurer had its requested rates cut from 18 percent to 10.6 percent for small groups with less than 50 employees, and cut from 20.1 percent to 10 percent for large groups of 50 or more employees.
Blue Cross & Blue Shield of Rhode Island, with more than 600,000 members, also saw its requested rates trimmed, from 10.5 percent to 8 percent for small groups, and from 10.5 to 9.6 percent for larger groups.
Tufts Health Plan of Rhode Island, with about 14,500 members in Rhode Island, was granted what it requested, a 4.8 percent increase for both small and large groups.
In making these rate factor decisions, Koller said that he attempted to strike a balance between “solvent insurers, adequately compensate providers, and rates of increase that risk making health insurance even less affordable.”
However, Koller said that the resulting rate factors are not as affordable as they need to be. “Health insurance is expensive because medical care is expensive,” he said. “Medical care is expensive – rising at rates of 9 percent per year – because of the prices we pay and the number of services we use. More affordable rates of increase will not occur until we change the way our medical care is organized and delivered.”
Koller noted that there had been general compliance by the health insurers with the four “Affordability Standards” developed by the Office of the Health Insurance Commissioner (OHIC) to reduce the underlying costs drivers in the medical care system. By focusing on primary care and provider payment reform, he continued, “we will we start to get a handle on the costs that are a source of such difficulties for purchasers.”
Blue Cross & Blue Shield of Rhode Island issued a statement that said it concurred with Koller’s concerns about affordability. “As pointed out by OHIC, health insurance premiums are a direct reflection of the ever-increasing cost of health care,” said Laura Calenda, Blue Cross spokeswoman. “It’s also clear that with the underlying cost of care continuing to rise about 9 percent every year, doctors, hospitals, regulators and health insurance providers will all need to work together in new and innovative ways in order to reduce those costs.” Calenda said that Blue Cross was committed to making “high quality, more affordable healthcare a reality for everyone in our state by improving the local health care delivery system.”
UnitedHealthcare of New England said that it was “pleased” it was able to reach an agreement with OHIC, and said further that it shared Koller’s concerns with providing affordable access to quality care in Rhode Island.
“Premium rates largely reflect the cost of health care – hospital, physician and pharmacy costs continue to be among the largest drivers,” said Anayo Afolabi, UnitedHealthcare spokeswoman. “While consumers’ utilization may have moderated, unit pricing – the prices charged by hospitals and physicians for specific services – continues to increase. UnitedHealthcare prices its health plan premiums based on medical costs and expected claim expenses to ensure appropriate financial stability.”
Lt. Gov. Elizabeth H. Roberts, chair of the state’s Healthcare Reform Commission, said that the rate factor decisions reinforced her strong belief that health care delivery and payment must be reformed to protect Rhode Island’s small businesses and families from continuously rising insurance rates.
“OHIC’s decision on rate factor increases for small and large group insurance simply underscores the dire need to transform delivery and payment of health care. We must reverse the trend of spiraling medical costs to make health care affordable and sustainable for Rhode Island businesses and families,” said Roberts. “I am confident that implementing reforms such as the health benefits exchange, a competitive online marketplace for purchasing health insurance, will begin to bring cost savings in the form of rate relief to Rhode Islanders,” she said.