Gulp! Regence rate boost averages 19 percent for individual plans

Regence BlueShield on Tuesday began notifying 137,000 individual-plan customers that their premiums are rising an average of 19 percent in July in the steepest increase for individual plans this year by a Washington health insurer.

And for 16,000 of those enrollees, the rate increase will total 40 percent because they also happen to be moving into an older, more expensive age group.

The rate jump is a sharp change from last year, when Regence proposed — then rescinded — raising premiums by 5 percent. Since leaving the rates unchanged last July, Regence has gained 30,000 new customers, bringing its total individual members to 137,000.

The rate boost does not apply to people who buy their coverage through employer plans or small-group plans. But both Regence's rate reversal last year and the size of this latest premium increase have outraged Washington Insurance Commissioner Mike Kreidler, who accuses the insurer of a bait-and-switch.

"I have serious concerns that consumers may have been whipsawed in an effort by Regence to increase market share," Kreidler wrote in a letter sent Tuesday to state legislative leaders.

But Kreidler has no power to stop the increase.

In 2000, the insurance commissioner's office lost the power to authorize rate changes for health plans sold to individuals and families as part of a deal to entice carriers back into the individual-plan market. Insurance companies had halted selling such plans in Washington after the state required them to issue policies to even the terminally ill.

Under the current rules, insurers are free to adjust their rates as long as they pay out at least 72 percent of the premiums as medical claims.

The state still regulates rates for small-group plans. In January, Regence raised rates for its small-group market by an average of 9.9 percent. But it had originally asked the state to approve an increase of 11.5 percent.

A bill that would have restored the state's authority to regulate individual rates died in the state House in April. Regence, Washington's second-largest health insurer, and other carriers opposed the bill.

Regence's competitors also have raised their rates for individual plans. Premera Blue Cross, for instance, has filed for an 8.1 percent increase effective June 1.

Most of Premera's individual business is sold by an affiliate company, LifeWise, which did not raise premiums this year but raised deductibles and changed benefits instead, according to the state.

Kreidler contends that the insurers waited until after the Legislature adjourned before informing his office of their rate plans. He wrote that comprehensive health reform is needed to "stop rewarding insurers for avoiding risk and gaming the system."

Charlie Fleet, a spokesman for Regence, said it needed to raise premiums to cover higher claims costs. The rate increase ranges from 5 percent for customers who have high-deductible, health-savings accounts to 21 percent for those with richer, low-deductible plans.

Those who will see 40 percent rate increases generally have more expensive plans and are moving to older age brackets.

Some Regence individual plan members have not had a rate increase in two years, Fleet noted.

And he added that even with Regence's higher rates, the market for individual plans in Washington remains competitive with several companies vying for customers.

"We offer good value to our members," Fleet said.

Kyung Song: 206-464-2423 or ksong@seattletimes.com