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Koller slashes BCBS proposed rate increase

March 9, 2011

Health Insurance Commissioner Chris Koller says Blue Cross Blue Shield’s members who buy their own health  insurance should pay an average rate increase of 1.9%, not the company’s requested 7.9%.

Koller says he arrived at his rate by-

1. Eliminating Blue Cross’s contribution to its reserves

2. Not allowing the rate to include a portion of payments Blue Cross makes to the state (taxes on premiums and assessments)

3. Reducing the amount that he thought was appropriate for paying for medical inflation in areas like hospital inpatient/outpatient care and pharmacy costs.

Koller says the  so called “direct pay” members of Blue Cross (people who buy their own insurance) are “absolutely the most vulnerable in the commercial insurance market” because they don’t share the cost of insurance with their employers or receive the benefit of buying with a group of people.

That’s why Koller’s office didn’t allow certain increases for this group that might be appropriate for folks that get their health insurance from their employers.

In a written statement, Blue Cross says it’s “extremely disappointed” with Koller’s decision-

In addition to not covering the cost of our members’ projected medical claims, the 1.9% approved does not even those taxes and assessments, which made up almost half—or 3.6%–of the filing.  As a non-profit, our only source of funding for taxes and assessments is premium dollars.  We have no other revenue sources.

Koller says he made a similar decision last year about shielding direct pay buyers from the cost of surcharges, taxes and profit so Blue Cross shouldn’t be surprised.

Blue Cross may accept Koller’s ruling or appeal it in court. The health insurance company says it hasn’t made a decision on an appeal yet.

The rate increase takes effect on April 1st and affects around 14,000 Rhode Islanders.

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