Consumer Smarts: Be wise in buying a health plan
08 01 08 - 14:41
By PHUONG CAT LE
P-I REPORTER
Sandy, a Bothell resident who asked that his last name not be used, said his wife's monthly insurance premium jumped from $520 to $637 at the start of this year. She's 62, doesn't yet qualify for Medicare, and so she bought into an individual health plan with Premera LifeWise Health Plan of Washington.
The couple knew they would have to pay a high premium, but they're more concerned that insurers can raise future rates on a whim.
LifeWise raised rates by 22.5 percent last fall, blaming high medical costs, increased prescription drug use and a new state law requiring expanded coverage for mental health treatment. That hike followed a 12 percent increase earlier in the year.
By PHUONG CAT LE
P-I REPORTER
"If they can raise rates any time," he asked, "... the poor consumer, what can they do but keep paying it?"
Q: Who regulates individual health plans? And do insurers need approval before raising rates on individual health plans?
A: Providers of individual coverage plans must file their rates with the state insurance commissioner, but "we have no jurisdiction," said the agency's spokeswoman, Stephanie Marquis. The insurance commissioner has authority over home, auto, life and other property and casualty insurance; when those insurers want to raise premiums, they must file the rate hike, justify them and get approval, Marquis said. However, for individual health plans -- coverage that consumers buy directly, not through employers -- insurers don't have to get rate approval from the state.
It goes back to a deal struck by the Legislature in 2000 to prod state health insurance carriers back into the individual coverage market. In the late 1990s, many health insurance carriers stopped writing new individual policies in this state, saying they were losing too much money.
Among the compromises made to get insurers back in the market: "They (the Legislature) took away our authority to regulate rates in the individual health plan market," said the OIC's Marquis.
In Washington, about 250,000 people have individual health plans that consumers, many who are self-employed, buy for themselves, Marquis said. These are people who aren't eligible for group health insurance, Medicare or Medicaid.
When LifeWise announced its increase last November, the company said it needed to raise rates to cover an estimated $27 million increase in medical bills for members. Officials noted that most of the premiums collected pay for medical bills, and profit from the LifeWise individual business has been 2 cents on the dollar over the past five years.
A bill last year that would have given the state insurance commissioner the authority to review individual health benefit plan rates passed out of the Senate but didn't make it out of the House. Commissioner Mike Kreidler intends to push for similar legislation this year.
If you're in the market for an individual health plan, compare plans. Read the OIC guide on shopping for individual health care coverage found at goto.seattlepi.com/r1214.
Currently, eight companies offer individual health plans in this state. In King County, five are available: Group Health Cooperative, KPS Health Plans, Premera Blue Cross, Premera LifeWise Health Plan Washington, and Regence BlueShield Washington.
For more information, contact the insurance consumer hot line at 800-562-6900.
Consumer Smarts runs every Tuesday. If you have a consumer question we'll try to get it answered. Call Phuong Cat Le at 206-448-8390 or e-mail consumersmarts@seattlepi.com.