Rhode Island Attorney General Peter F. Kilmartin formally opposed Blue Cross Blue Shield of Rhode Island’s (Blue Cross’s) request for an overall 8.1 percent rate increase for its Direct Pay line of business. After thorough analysis and an independent actuarial study, the Attorney General determined that the request by Blue Cross is too high and should be rejected. Attorney General Kilmartin submitted an alternative calculation that said no more than an overall increase of 0.4 percent can be justified. The opposition was filed with the Office of Health Insurance Commissioner at a public hearing.
“Unfettered increases in health insurance rates are putting more and more people at risk of losing coverage, particularly those who pay for 100 percent of their health insurance. Blue Cross should be more cognizant of the financial burden their proposed rate hikes have on struggling Rhode Islanders,” said Attorney General Peter Kilmartin. Based on a thorough review of Blue Cross’ rate increase filing and analysis provided by the independent actuary, the Office of Attorney General has found:
- Blue Cross has arbitrarily selected trend factors for its projection of health care costs that are higher than the facts would warrant, resulting in a rate increase for Direct Pay subscribers that is excessive.
- Blue Cross is charging excessive administrative costs to Direct Pay subscribers in its filing by not crediting subscribers with certain cost savings it has observed
- Blue Cross’s proposed rates include an inappropriate charge for contribution to reserves from Direct Pay subscribers.
- Blue Cross’s proposed rates include an inappropriate charge for state assessments and premium taxes. Last Year, the Commissioner determined that these costs should not be allocated to Direct Pay subscribers until it develops a more accurate method of allocating these costs to this group of subscribers.
“Just as many businesses and individuals have had to do over the past few years, I believe Blue Cross can find cost savings across the organization that can and should be re-invested in the ratepayer to limit any rate increases,” continued Attorney General Kilmartin. “At a time when many employees are forced to pay as much as 20% of the total cost of health insurance and for their own long-term disability insurance coverage, Blue Cross should follow suit and tighten its own belt before it asks its subscribers for rate increases.”
Two examples of very generous employment benefits for Blue Cross employees that are in conflict with a majority of Blue Cross subscribers are long term disability insurance, which is offered at no cost to the employee after one year of employment, and health insurance, which costs employees an average of only four percent while most subscribers are forced to pay at least 20% of the cost of their health coverage. The Attorney General’s filing before the Office of the Health Insurance Commissioner was given by Assistant Attorney General Genevieve Martin, Unit Chief for the Insurance Advocacy Division.