Writings and observations

Regence hearing: More questions than answers

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Regence hearing at University Place in Portland/Stapilus

The public hearing this afternoon on the 22.2% rate increase request by Regence Blue Shield of Oregon should have been commonplace rather than something new and unusual – an open discussion of the cost of health care. An editorial note: We should have been doing this for a generation. There should be much more, with every rate increase and cost increase proposed, in every state and even in every county. (There is legislation afoot at Salem to accomplish that.)

Large pieces of the costs were spotlit, laid out, examined, analyzed. We all could surely use more of that.

It gives the insurer, who was on the hot seat in this unusual proceeding (usually only paperwork, much of it out of public view, is involved), a change to make their case. And for the first hour of this presentation, out of the scheduled two and a half, Regence aggressively did just that.

The state Insurance Division presenters said that no rate proceedings have ever drawn as many public comments (maybe in part because few have gotten nearly the media attention – even local TV showed up for this.) About 250 people showed up, and the speakers appeared heavily oriented against the increase. They were calm, patient and well behaved. But, you got the clear sense, not happy. (Only anti-rate increase speakers drew applause.)

Regence argued both on statistics and otherwise – a tad too slick and defensive both. They spoke of “people like Kathy and Michael.” And one other (name lost in notes here), referenced regularly, each of whom received hundreds of thousands of dollars a year. The premiums paid by them (whether per month or per year was unclear) were noted as $3,400, $7,370 and $1,850. If annual, what kind of terrific deal were they getting? If monthly, they – the first two anyway – were paying a hell of a lot in premiums.

A state questioner noted that this is an increase request higher than most competitors – and Regence acknowledged that customers are using less health care.” The reply noted that percentages can be misleading,” minutes after – and without a tracy of irony – a presentation loaded with percentages.

Some of its points were sounder. One Regence speaker remarked that better cost transparency is needed, that better analysis of effective treatments be developed. And “It’s going to require we change the economics of health not to reimbursing hospital on ho many times I show up in their office but when I get better.”

Like any insurer, a Regence speaker said, it has to collect enough in premiums to pay out for medical costs, and they need to collect enough (this was in response to a question about whether higher prices will continue driving people away from insurance). “If we pick wrong, who will pay?” A pertinent question, but maybe one constituting a better argument for something like single payer.

Laura Etherton, The speaker for OSPIRG Foundation – a nonprofit that has been working on medical costs – said the increase “will likely drive more Regence customers (to either drop out or move toward more high-deductible policies (“benefit buydown,” in the lingo), further destabilizing the health insurance market. Regence has increased insurance rates by double digits every year of the last decade, while enrollment dropped. (Regence downplayed the dropout effect of a rate increase and suggested enrollment should remain stable; OSPRIG said that 43,000 customers have dropped out over the last decade or so, from a peak of more than 100,000.

(Start here for more of the OSPIRG’s research, which is extensive, here.)

Because of the tendency of insurers to avoid non-health people, “If you’re sick (with pre-existing condition) you’re pretty much stuck here” while healthier employees would be more able to move – or opt out of insurance. Among other things, that will make the Regence clientele progressively “sicker” – more expensive too. (And presumably an ever higher rate increase next time around.)

OSPIRG figured that Regence spends a little under 80% of its income for cost payout, with the largest chunk of the rest going for administration. “Regence is financially on good footing,” she said.

The group praised state regulators for requiring insurers to declare what they were doing to cu costs while maintaining quality. As to providing specifics, she said, Regence said that it could not – was “all but impossible” – to break out specific savings.

“Its not good for Oregonians’ health or their family budgets,” Etherton said.

The public was, as you might expect, overwhelmingly opposed to the increase. (One, a retired nurse, drew applause and laughter with the note that although Regence is a nonprofit, “its speakers are the more expensively dressed people in the room.”)

One physician elegantly commented, “We all know that just because you’re not for profit doesn’t mean you’re against it.” More darkly: “Each of us is one serious illness away from bankruptcy,” he warned, and a 22% rate increase will make that worse.

Regence employees were scattered through the public section as well (enough of them that the audience began to groan). As you might expect, they did not bolt the reservation, though there were a few non-corporate views. One acknowledged, “It’s clearly not a sustainable model.” She said the insurer is working on cost containment; but again not including many specifics. (One made the pitch, “I am an unabashed supporter of President Obama.”)

The question coming foremost to mind here after listening to all of it was this … if the current health insurance model, if its business premises, are inherently unstable and unsustainble – and no one present, really (some blue-sky comments from Regence notwothstanding), seemed to argue that it is not – then is it time we start looking serious toward an entirely new model? Or, in the alternative, force our larger population to cling on to a slowly sinking ship?

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