Regence BlueShield said Wednesday it wants to increase average premiums by nearly 15 percent on customers who buy coverage for themselves and their families, a week after the state insurance commissioner said the insurance company is sitting on record surpluses.
OLYMPIA — Regence BlueShield said Wednesday it wants to increase average premiums by nearly 15 percent on customers who buy coverage for themselves and their families, a week after the state insurance commissioner said the insurance company is sitting on record surpluses.
Regence BlueShield said it has asked the Office of the Insurance Commissioner to approve the increase, which would raise rates an average of 14.7 percent, though it would vary for customers, depending on their plans and other factors. Company officials said the insurer expects to lose money this year.
“We understand that it’s becoming harder for individuals to afford the increasing cost of health care,” Jonathan Hensley, president of Regence BlueShield in Washington, said in a written statement. “But as dozens of carriers have abandoned this fragile market over the years, Regence is doing our best to continue offering a comprehensive set of affordable benefits to serve Washingtonians, even as we predict a loss of $4.5 million on this business this year.”
If approved by Insurance Commissioner Mike Kreidler, the increase would go into effect Oct. 1 and last through Dec. 31, 2013.
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Last week, Kreidler announced that Regence BlueShield and Premera Blue Cross each had surpluses of more than $1 billion, more than what the companies are required to set aside in reserves.
Kreidler argued then that the companies were building up a financial cushion that “comes at an expense for people” and noted that the cost of individual health policies in Washington more than doubled between 2005 and 2011.
Kreidler noted Wednesday that even if Regence BlueShield loses what it projects, “that’s less than half of 1 percent of the company’s $1 billion surplus.”
“In fact, Regence could continue to lose $4.5 million annually for the next 220 years and it would still have a surplus,” he said in a written statement.
Kreidler said Regence BlueCross BlueShield of Oregon had made a similar request for a 6.4 percent increase there, but after the state’s review and objections, it withdrew the request Wednesday.
“Any future rate request will face the same thorough scrutiny,” Kreidler said.
Kreidler has 60 days to consider Regence BlueShield’s request.
In a statement last week, Regence BlueShield said its capital reserves provide a safety net for members against unknown risks and costs, as well as money needed to finance initiatives. Using such money to buy down rates promotes a false impression of reducing health-care costs; the cost of health insurance goes up because medical costs go up, the company said.
Kreidler has been pushing to change state law so the insurance commissioner can take into account the size of insurers’ surpluses when considering whether to approve or deny premium rate increases for individual and small group plans. Eleven states, including Oregon, give their insurance commissioners that authority, he said.