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Before they can raise premiums on individuals and small businesses, Oregon’s health insurers must get permission from state officials. For several years, OSPIRG Foundation has put a magnifying glass to premium hike proposals to lend the consumers’ perspective to the process. Meanwhile, thousands of Oregonians have participated by weighing with their own perspectives to the state’s Department of Consumer and Business Services. All this additional scrutiny has helped cut over $179 million in waste from health insurance premiums since 2010.

With that in mind, here’s the skinny on OSPIRG Foundation’s new analysis of 2017 rates proposed by five Oregon insurers—Kaiser, Moda, PacificSource, Providence and Regence. There’s some good news, some concerning news, and some very concerning news, but the best news of all is that thanks to Oregon’s health insurance rate review process, the insurers don’t get the last word.

Here’s what our investigation found this year.

The Good News

-You have options. Oregon’s health insurance market remains competitive, and consumers who do experience rate increases will have options if they shop around, and may be able to save a lot of money by switching coverage. Although a couple of insurers have recently left or will be leaving the Oregon market, and some insurers are scaling back their offerings in some parts of the state, all Oregonians will still have choices in health coverage. Also, eligible consumers should be able to mitigate all or part of future rate hikes by accessing tax credits to help pay for coverage, which are available through the Health Insurance Marketplace at healthcare.gov.

-Due to changes won with the support of over 30,000 Oregonians, for the past three years every Oregon insurer must submit hard data on health care quality, cost and utilization as part of the rate filing process. These metrics represent a step forward for transparency and provide some helpful information to evaluate insurers’ efforts to contain costs and improve quality of care.

The Concerning News

-Some Oregon insurers appear to be overstating medical cost trends. With a number of national studies demonstrating a slowdown in health care cost growth in recent years, projections as high as 8.4% (from Regence) merit close scrutiny. Other insurers, including Providence and PacificSource, have large administrative cost growth projections that may be overstated.

 Providence projects a 6.1% increase in medical costs despite historical data in the company’s filing suggesting that its medical costs have actually declined in the last year.

 Kaiser, despite having one of the lowest medical cost trend projections, appears to have decided to raise its medical trend projection above the level it considers necessary to meet the increases in medical costs it is actually experiencing. This may be in response to Oregon regulators’ decision to raise Kaiser’s rates above the level the insurer requested last year as a measure to help stabilize the Individual market. We are concerned that Kaiser’s members may wind up being asked to pay more than they need to pay to cover the cost of health care services.

-Many insurers’ cost projections for covering their current members and future enrollees may be overestimated. The costs of providing health care services to Oregonians who signed up in 2014 and 2015 have been higher than Oregon insurers initially projected, but there are reasons to doubt whether these trends will continue. Many uninsured young Oregonians remain eligible for tax credits under the Affordable Care Act, and may be motivated to enroll by improved outreach efforts and/or increases in the ACA’s tax penalty for going without insurance.

-Many insurers are proposing larger profit margins than in previous years while also proposing some of the largest rate increases in recent Oregon history. Despite financial losses for many insurers in 2015, the financial position of Oregon’s major insurers remains sound. This means that Oregon insurers could take a more moderate approach to increasing rates to avoid large, disruptive rate increases in 2016, yet many have chosen to request large rate hikes instead.

-The cost, quality and utilization metrics submitted for the second time this year raise important questions for some insurers that have yet to be fully answered. Despite the many cost containment and quality improvement initiatives outlined in the rate proposals, none of the insurers we examined posted significant gains on these metrics.

The Very Concerning News

-Oregon insurers do not appear to be achieving savings from reductions in costs to Oregon hospitals, or sharing these savings with their members. Public filings from Oregon hospitals continue to demonstrate that factors including record-low levels of uncompensated care are contributing to large hospital profit margins across the state, yet consumers do not seem to be benefiting in the form of lower premiums. For example, Providence Health & Services, the state's largest hospital chain, is sitting on nearly $6 billion in cash reserves while its insurer affiliate, Providence Health Plan, wants to raise rates by nearly 30%. In light of these surpluses, it seems reasonable for insurers to expect commensurate savings on hospital costs, and to pass those savings along to consumers, but few insurers were able to identify any savings in their rate proposals—and even those insurers that have acknowledged the issue do not seem to be doing enough to address it. We are deeply concerned that, if this trend continues, Oregon consumers will keep being asked to foot the bill for costs that no longer exist in our health care system.

-Many Oregon insurers are proposing large rate increases that will have a major negative effect on tens of thousands of Oregon families across the state. The large rate hike proposals we examined from Kaiser (14.5%), PacificSource (15.2%), Regence (17.9%), , Providence (29.6%) and Moda (32.3%) will affect over 200,000 Oregonians across the state, potentially costing families thousands of additional premium dollars per year.

These large increases would be highly disruptive for consumers. While Oregon’s economy appears to be improving, these increases would still take place against a backdrop of largely stagnant wage growth, and represent increases many times in excess of the rate of inflation in the broader economy.

While Oregon has a competitive health insurance marketplace and consumers have the option of shopping around, large year-to-year premium fluctuations can be highly disruptive for consumers and for the stability of the health insurance market as a whole. Tax credits available through healthcare.gov will mitigate some of these costs for eligible individuals, but it is worth pointing out that individuals currently receiving tax credits may see increases in effective premium far in excess of the average increases included in the insurers’ filings if their rates increase faster than the value of the tax credits, which are pegged to the second-cheapest Silver plan available through healthcare.gov.

-Some Oregon insurers are pulling out of large parts of the state, leaving many Oregonians with fewer choices and higher costs. Moda, PacificSource and Providence are all leaving the health insurance markets in large portions of Eastern and Southern Oregon, as well as the Oregon Coast. Moda and Providence will no longer be providing coverage in Bend and Central Oregon, and PacificSource is pulling out of Eugene and Salem.

These moves will have a disruptive effect not only for these health plans’ current members living in these areas, but for the competitive landscape in these regions. With fewer insurance companies competing for members in these places, the remaining insurers will have less incentive to keep down costs going forward. This move may cut costs for these insurers, since these areas may be higher cost—many of them have uncompetitive markets for health care services that frustrate insurers’ efforts to negotiate lower prices for their members—but in the context of double-digit rate hike proposals from all of these insurers, it’s hard to see the upside for consumers anywhere in Oregon. We urge Oregon policymakers to consider the impact of these moves and develop a strategy to ensure sustainable access to reasonably-priced health coverage in all parts of the state.

-Oregon’s insurers are still not doing enough to demonstrate that they are doing all they can to keep down costs—but the rest of the health care industry needs to start pulling its weight, too. Rising medical and prescription drug costs are far and away the most significant driver of rising health insurance costs. Health insurance companies have a significant role to play to help lower these underlying costs—not by cutting access to needed care—but by cutting waste and working with providers in their networks to focus on prevention and other proven strategies that keep patients healthier.

But research continues to show that rising costs are due to prices for health care services, known as “unit costs,” as well as efforts to keep people healthy and out of the hospital. Since health care providers have a role in rising unit costs for care as well as rising costs associated with inappropriate and wasteful health care practices, we recognize that insurers do not always have complete control to restrain overall cost increases. The broader health care industry also bears a great deal of responsibility for rising overall costs, and we urge DCBS and Oregon policymakers to consider options for broadening accountability for the industry as a whole going forward.

The Oregon Department of Consumers and Business Services will be making decisions on these rate proposals by July 1. Watch this space, and Oregon’s rate review website, for updates. We’ll be sure to keep you in the loop.

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