Highmark asks to raise 'last-resort' rates
Almost 30,000 people in Western Pennsylvania who can't get health insurance anywhere else are facing a 10 percent hike in their monthly rates under a plan submitted by Highmark Inc. to state insurance regulators.
Highmark, the nonprofit "insurer of last resort" in Pennsylvania, this week asked the state's Department of Insurance to allow it to increase rates an average of 9.9 percent on five plans it sells to people who don't receive insurance coverage through their employer and can't get health insurance from other providers because of their medical conditions.
The Downtown-based insurer, which has more than 3 million members in the state, said it loses money on the plans and points out that no for-profit company would insure the people covered under the five plans for the prices that Highmark charges.
"If we used the actual cost, the price of the insurance would be much higher," spokesman Michael Weinstein said.
The five plans are ClassicBlue Traditional, Preferred Blue Preferred Provider Organization, PPO Blue High Deductible, Special Care and KeystoneBlue for Kids HMO. Highmark said 28,790 of its members in Western Pennsylvania are covered under those plans.
More than half -- about 16,600 -- are covered under Special Care, a program that was meant to fill the gap when the state-funded adultBasic program for the working poor was eliminated in February.
Highmark spent $98.9 million in the past two years subsidizing the rates charged to guaranteed-issue policy holders, Weinstein said. And it expects to contribute $46.3 million next year.
But critics of the rate increase said it's unjustified, given Highmark's more than $3 billion in cash reserves, and unreasonable for Special Care members.
"It's just sad that we're continuing to ask the working poor ... to continue to absorb these types of increases," said Beth Heeb, executive director of the Consumer Health Coalition, a North Side nonprofit organization that helps people get access to health care services.
Without Highmark's proposed rate increases, Special Care is 3 1⁄2 times more expensive than adultBasic was, Heeb said. "They're really being stretched quite thin."
The increases are necessary because health care costs continue to increase, and members in those plans use more medical services, Weinstein said. And Highmark's reserves are needed to compete with for-profit insurance companies that can tap investors for money to expand and add more products.
"All that surplus is used to help us compete in the marketplace with new products, new technology, and it keeps Highmark financially viable," Weinstein said.
Still, some critics were incredulous. Lance Haver, director of consumer affairs for the city of Philadelphia, said he hadn't yet read Highmark's proposal, but he would question the justification, given the $475 million it plans to spend to acquire West Penn Allegheny Health System and its proposed takeover of Blue Cross Blue Shield of Delaware.
"I would want to ask how is it possible for Highmark to need more money when they can afford to buy a hospital system and an insurance company in Delaware," Haver said.
But he's not likely to receive an answer.
"Even though I have a right to raise all those questions, there's no requirement for Highmark to answer," he said.
Haver criticized the process because, unlike proposals by utility companies to raise rates, there will be no public hearing in which witnesses are called to testify and no written decision by the state that could be challenged in court.
"Because the insurance department doesn't write an explanation for why they raised rates, there's nothing to challenge," he said.
Highmark's proposed increases will be published on Aug. 5, giving the public 30 days to submit comments. After that, the insurance department takes 45 days to review the increases, department spokeswoman Melissa Fox said.
Regulators examine data submitted by Highmark justifying the increases and can approve the request, deny it, approve an increase smaller than requested or ask for additional information, Fox said.
"The purpose of the department's review is to make sure that the rate request is not excessive, inadequate or unfairly discriminatory to policyholders," she said.