 CROSS TO BEAR: Karen Kirsch is fighting the state Insurance Division. |
When Karen Kirsch’s health-insurance premium jumped from $444 a month to $559 a month in one year, she did what no Oregonian has done before.
The 63-year-old retired psychotherapist from Northwest Portland called bullshit on the state Insurance Division by challenging a rate increase it approved.
Her case could affect 88,000 Oregonians who took a collective $11.8 million hit when the Insurance Division let Regence BlueCross BlueShield of Oregon raise its premiums on individual accounts in July. Kirsch wants July’s quarterly increase rescinded.
Her attorney says the case shows just how easy it can be for Oregon’s largest insurer to strong-arm the agency charged with preventing insurers from gouging customers.
“Regence brought its political weight to bear,” says Charlie Ringo, Kirsch’s pro bono attorney and a former Democratic state lawmaker. “The [Insurance] Division really is a toothless tiger and carries out no regulatory function to protect consumers.”
Records Ringo obtained from the state show Regence asked the Insurance Division for a 10.3 percent quarterly increase for individual policies starting July 2008. Add that to all its previous increases, and that’s a 25.9 percent increase from July 2007 costing Oregonians $30.7 million.
State actuaries determined only a 16.5 percent annual increase was justified. Regence said in a March 14 letter to Insurance Division actuary Scott Fitzpatrick that the company was rejecting that proposal. After at least two meetings with Regence staff, the agency said it would approve an annual 18.7 percent increase. Regence rejected that offer, too.
On April 8, Cory Streisinger—head of the state Department of Consumer and Business Services, which oversees the Insurance Division—met with Bart McMullan, president of Regence’s Oregon operations.
Ringo calls it a “secret meeting”—no notes were kept, no records were produced. Mike Becker, director of legislative and regulatory affairs at Regence, attended the meeting and says he argued Regence was losing money on individual policies. He says 94 percent of its premiums go to pay medical claims. Streisinger declined to comment.
After the meeting, the state reversed course. Under the subject “Gaming the System,” actuary Fitzpatrick wrote an email offering new numbers he said “will be able to pencil out the increase.” The state granted Regence the full 25.9 percent rate hike April 11.
When Karen Kirsch saw her rates would jump, she spoke with her husband, Larry Kirsch, a health economist for 35 years. He says the increase went almost entirely toward Regence’s profit, sales commissions and administrative costs.
Kirsch took her case before state Administrative Law Judge Alison Greene Webster on Feb. 4 and 5, arguing the agency broke the law by failing to protect consumers. Ringo expects the judge’s recommendation in early May. Streisnger will make the final decision on whether the rate increase stays.
It’s the first such challenge in state history, and the Kirsches hope it will bring change to the Insurance Division. Larry Kirsch says the agency has never made a decision that led an insurance company to challenge them in a hearing.
“They haven’t had an adequate amount of independence or spine,” he says.
FACT: The state Insurance Division granted Providence Health Plan a 25 percent increase from November 2007 to November 2008.
Meanwhile, here are a few facts supplied to the writer that didn't make it into the article.
--While premium rates rose 26 percent for some individuals like Ms. Kirsch, premiums on the Regence Oregon individual product don't even cover the cost of medical claims. We experienced a $23 million loss for that line of business in 2007, and an additional $26 million loss in 2008.
--Our
The truth is this, most insurance money goes to claims. A very small portion of it goes elsewhere. If anyone is to blame, it's the outrageous costs that are charged for medical equipment, drugs, hospital stay fees and doctor's fees. For example, I spent 4 days in a hospital costing nearly $13,000 dollars. Even after my insurance paid, I still owed to the hospital, but it was a lot less than $13,000 dollars. Where did that money come from that I didn't have to pay? It came from others in my insurance community. We all pay into one big pot so that when a costly emergency happens, we aren't stuck paying it alone. People tend to think very selfishly when paying their premiums, that is until something bad happens to them and they have to pay thousands of dollars all at once.
I would like to say that health insurance is not a simple solution. We are in a capitalistic country and therefore the drug companies, the medical equipment manufacturers, the doctors and the hospitals are there to turn a profit. Regence is unique in that it doesn't turn a profit. Regence attempts to put money away for future claims and for the bad times, when not as much money is coming in. Regence has actually got the short end of the deal, paying out more in claims than premiums it's taken in. Last time I looked, Regence doesn't have money trees or a magic wand to create more money out of thin air to cover those claims.
The next time you bitch about paying $5,000 dollars for a year of coverage. Think about how far that $5,000 dollars will go toward 4 nights in the hospital. I think I'll stick with my fellow insured and feel blessed that others are helping me out. That I have a great organization like Regence there to help me.