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Concerns about surging health care costs drove more than 150 people Thursday to hear Oregon's largest health insurer defend its request to raise premiums an average 22 percent.
Then Laura Etherton, a health policy advocate for the Oregon State Public Interest Research Group, urged the division to reject the request.
"It is not justified, and it will only make matters worse," she said.
Other residents also questioned the increase.
"This is such a flawed system, such a flawed business model," said Vic Baker, who buys insurance from Regence along with his wife. "These kind of increases can't continue."
Regence's request would affect 56,500 Oregon residents who do not get insurance through employers and buy from the company individually or for their families.
The increases, however, would vary among individual customers according to their age and circumstances. Rates would rise less than 20 percent for about one-fourth of customers, 20-to-25 percent for half and 26-to-34 percent for another fourth.
The company argues it needs the increase, scheduled to take effect Aug. 1, to cover rising medical and prescription costs and benefit changes related to the federal health care reform law passed last year.
President Jared Short said the company has lost $98.3 million in its individual insurance market over the last five years while its annual payments for claims climbed by $34 million.
The company also has cut 1,000 employees in the last year, frozen employee wages and reduced benefits, he said.
He said the 22 percent increase would cost his customers on average $37 more per month, of which $1 would go to administration, $11 to new benefit costs and $25 to the rising costs of care.
"This increase is necessary for us to meet our promise to pay our members' medical bills," he said.
But Etherton, whose group is on contract with the Insurance Division to review rate requests, said the company provides no explanation for how it concluded medical costs would climb by 12.5 percent next year.
The cost of its own claims climbed by 2 percent between November 2008 and October 2010, she said. She also said the company has a reserve of more than $500 million, 10 times what is considered a prudent minimum. The company has had double-digit increases every year since 2007, she said, and during that period has seen its enrollment plunge by 43,000 customers.
Another big rate increase would cause more people to leave, reducing the risk pool and undermining the stability of the company's individual market, Etherton said.
Many people opposed the increase, including David Young, who identified himself as a retired emergency room trauma nurse who saw the grim results of people trying to live without health insurance. Uninsured patients with diabetes would show up in the emergency room with black toes, a condition that could be prevented with early visits to a doctor, he said.
"I saw so many patients that had to have their toes amputated," he said. "After that we take off their feet. Then we take off their legs."
Karen Myers, a Regence employee, urged the division to support the rate increase, noting that company is committed to saving costs and "the hard work of making changes in the health care system."
The Oregon Insurance Division will review the testimony and complete an analysis of the rate request before making a decision on it by the end of the month. The public can continue to comment on the request online through June 15.
The state decided to hold the hearing because of the unique quality of Regence's request, said Cheryl Martinis, spokeswoman for the Insurance Division.
Regence is part of a not-for-profit company with health plans covering 2.5 million people in Idaho, Washington, Idaho and Oregon, with more individual insurance customers in Oregon than any other carrier.
Sen. Chip Shields, D-Portland, pushed several bills this session to bring more scrutiny to insurance companies, all vigorously opposed by insurers. A bill that would require insurers to notify customers of rate requests and another that would end insurers' exemption from sanctions of an unlawful trade practices act both died in committees.
Senate Bill 717, which requires public hearings on insurer requests for rate increases exceeding 7 percent, remains alive in a subcommittee of the Joint Ways and Means Committee and has support from consumer and small business groups, including the Reasonable Insurance Premium Coalition.
Rising health insurance costs are affecting the "very framework of the economic viability of the state," said Ann Fisher, an attorney and founder of the coalition. "To fully protect consumers and small businesses, the (Insurance Division) needs to do more, and the first place to start is to make the reviews more transparent."
There is a correlation in other states between public hearings and lower rates, said Shields. His bill is needed, he said, "so that small business has a place at the health insurance rate review table."
Even before Thursday's hearing, people gathered outside the motel with signs protesting the rate increase. Many of them represented Jobs with Justice, a workers rights group that has fought for a single-payer health care system for 20 years.
Regence has lots of money, pays its executives big salaries, and is part of the problem of rising costs, said Margaret Butler, executive director.
"The insurance companies and the big hospital associations have a lot of power to keep thing the way they are," she said. "But it just gets more and more broken and gets worse and worse and people die all the time because people don't have health care."
-- Bill Graves
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