Blue Cross policyholders blast proposed rate hike

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Insurance: Company has proposed a 6.9 percent increase

By Associated Press

SANTA FE (AP) — A state hearing officer has listened to several Blue Cross Blue Shield policyholders speak of financial hardships they’ll endure if higher monthly premiums were to kick in as the insurer wants.
The insurance company has proposed a 6.9 percent increase on June 1 for 31,000 New Mexicans with individual health care policies.
Saturday’s hearing to take consumer comment in Santa Fe came after Blue Cross laid out its case for the increase earlier this month. The Santa Fe New Mexican reports The company argued it was needed to cover claims that led the company to lose $7.2 million in the individual market in 2011.
New Mexico Division of Insurance hearing officer Aaron Ezekiel has until April 20 to make a recommendation on the need for the rate increase.
Policyholders with employer-provided group insurance aren’t affected.
Sonia Shad Goldstein told Ezekiel that her premiums would go up to $809 a month, more than her mortgage.
“I imagine myself, a 60-year-old woman, without health insurance,” Goldstein told Ezekiel. “It scares the bejesus out of me.”
Several other Blue Cross Blue Shield policyholders spoke of potential financial hardships. Some asked him to reject the increase or they’d be forced to cancel their policies and join New Mexico’s already large uninsured population, while others expressed anger at the company.
With 430,000 of its nearly 2.1 million residents without health insurance, New Mexico has the second-highest uninsured rate in the nation, topped only by neighboring Texas.
Assistant Attorney General Brian Harris said his boss, Attorney General Gary King, will oppose the rate increase request.
With only a week to consider all the public testimony and the company’s arguments, including actuarial tables, before recommending action, Ezekiel has a difficult task. He must consider Blue Cross Blue Shield’s hard financial data and the plight of persons who might become uninsured if the increase goes through.
Blue Cross Blue Shield filed for the rate hike last year, and Saturday’s hearing represented the penultimate step in the process. Ezekiel’s recommendation will be used by State Insurance Superintendent John Franchini, who said he will decide the issue before June 1.
The timing of Blue Cross Blue Shield’s rate hike request provoked some skepticism Saturday, mostly because it predated a new law that took effect Jan. 1 giving New Mexico insurance officials power to vet a company’s finances, including examining executive pay and surpluses, before approving rate hikes.
“It seems to me that they are trying to ram through as many increases (as possible) before the law goes into effect,” said Fran Hardy of Lamy, who went on to urge Ezekiel to recommend blocking the request. That would force Blue Cross Blue Shield to file again and thereby be subject to the new law.
“I am not a lawyer,” Hardy said. “I don’t know the legalities involved in delaying their request until the new law takes effect.”
Speakers said the parent company should use its surplus to keep their monthly premiums lower. Blue Cross Blue Shield is a subsidiary of Illinois-based Health Care Services Corp., which recorded an $8.9 billion surplus in 2011, according to its financial filings.
The proposed 6.9 percent rise in monthly premiums is somewhat smaller than the 9.9 percent hike the company initially sought last year. But for more than 25,000 of the 31,000 affected policyholders, a rate increase would represent the second in three years. Blue Cross Blue Shield won a rate hike in 2010 that boosted costs for each policyholder by 18 percent to 25 percent.
Company officials have said that without the rate increase, Blue Cross Blue Shield might have to take drastic action, including pulling out of rural areas. The company is the only major health insurance carrier to sell policies to individuals in every part of the state, even rural areas, where the costs of offering health insurance are higher, officials have said.