As the national debate over health insurance reform rages on, many consumers in North Carolina are reeling from hefty rate increases.
President Barack Obama plans a televised summit today to revive his overhaul efforts. One provision would limit how much insurance companies can raise rates, following an outcry over increases by a big Blue Cross plan in California.
In this state, Blue Cross and Blue Shield of North Carolina, a nonprofit insurer that controls most of the state's market for individual policies, is allowed to raise those rates an average of about 12percent this year.
But the company recently increased monthly premiums 50percent or more for some members, forcing them to drop coverage or switch to cheaper plans with fewer benefits and higher deductibles. Blue Cross blames the increases on surging costs and demand for expensive medical care and services. It sets specific rates based on age, medical history and other factors.
David Swanson, a Durham investment adviser, received new rates for his teenagers. The monthly premium for his 15-year-old son increased about 11 percent to $185.15. The rate for his 17-year-old daughter jumped 54percent, to $255.57.
When he called Blue Cross to complain, Swanson was told that premiums for young women used to increase when they turned 18. The insurer lowered the age to cover rising costs.
"I told them there seems to be no justice," Swanson said. "By not adjusting rates across the board, it gets less notice."
Employers also are seeing double-digit rate increases from all health insurers, said John McDonnell, co-founder of Progressive Benefit Solutions, a Raleigh consulting firm. One factor is that consumers are getting more care during the recession.
"People who are working and have benefits are going to use the care, not knowing when they might lose their jobs," McDonnell said.
Rates in this state are regulated by the N.C. Department of Insurance, which reviews average increases based on actuarial data such as the insurer's losses and reserves. Last fall, the agency approved Blue Cross's request for a 12.24percent average increase for individual policies. Insurers also are allowed to adjust rates for specific customers based on a wide range of factors including medical history, age, sex and geography.
The baby's premium
Rebecca Freiert of Huntersville assumed there was a mistake when she got a letter last fall from Blue Cross explaining that the premiums for her son, now 9 months old, would jump 55percent on Jan.1.
The insurer told Freiert, a paralegal, that it was reclassifying infants because they use more services than older children. Freiert considered switching plans, but she learned that other companies had more limits on benefits and smaller physician networks.
She moved her son to a cheaper Blue Cross plan with higher deductibles and co-pays.
"My husband is convinced they get you in with a teaser rate," Freiert said. "If this is what they're doing with kids, just imagine if you're an adult with medical problems. I guess that's why people choose not to have insurance."
The Department of Insurance routinely receives complaints about Blue Cross, the state's largest health insurer, but isn't seeing an unusual number, said Bob Lisson, deputy commissioner of the consumer services division.
The department reports that Blue Cross controlled nearly 97 percent of the market for individual comprehensive policies in 2008, the most recent data available. The insurer has about 400,000 individual policies - most of its 3.7million members are covered by group plans through employers.
Rate increases are driven by "the underlying experience of the population we're evaluating, and cost and utilization of certain services," said Blue Cross chief actuary Patrick Getzen. The company is seeing rising costs as more members get hip and knee replacements or use expensive technology such as CT scans and X-rays.
Obama has proposed creating a national agency that would supersede state regulators and could reject rate increases. Critics say adding a bureaucracy won't do anything to control costs.
"It's fine to tinker with rates, but we have a larger societal issue of very expensive health care," Blue Cross spokesman Lew Borman said.
Individuals hit hard
Reform supporters say the system is failing consumers.
"The individual market is sort of a free-for-all; it's not tightly regulated," said Adam Linker, a policy analyst at the N.C. Justice Center's Health Access Coalition. The insurance department "approves general rate increases and averages, but it doesn't have strict authority" over individual consumers' premiums.
"Our suspicion, and across the country they're seeing this, is that rates are going up more than usual, especially for individuals and small groups," Linker said. "Some of it is higher medical costs and greater cost shifting.
"But these also are in anticipation of new regulations," he added. "They're trying to pad their bottom lines before new rules kick in."
Karen Harman, who is unemployed and lives in Raleigh, received notice from Blue Cross last fall that her rates would jump about 25 percent this year to $450 a month. Harman, 45, said she didn't have any big health changes to justify such an increase.
She switched to a cheaper plan with a $5,000 deductible, up from $1,000.
"I have no bargaining power and there aren't a whole lot of options," Harman said.
She didn't bother calling Blue Cross to complain. "I didn't want to take out my frustration on someone making $9 an hour," she said. "If I could have a direct line to the CEO, I might have tried that."
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