Health-plan costs soar for individuals

In what is becoming an annual ordeal for policyholders, Regence BlueShield is raising premiums for 135,000 individual health-plan members in Washington by an average 17 percent on Aug. 1.

It is the third consecutive year that the state's largest provider of individual coverage has boosted rates by double digits. And it comes after two other insurers, Group Health Cooperative and LifeWise Health Plan of Washington, recently imposed similarly steep premium increases.

This year's spikes have left consumers feeling even more powerless because state insurance regulators — who in 2008 regained authority to reject potentially excessive rates on individual policies — concluded that the latest premium requests were justified and left them virtually untouched.

Now some aggrieved consumers are wondering what, if anything, can curb runaway insurance rates.

"We need a public plan," said Terry Naughton, of Quilcene, Jefferson County, who, with her husband, is facing a 40 percent jump next month in her Regence premiums.

The couple's payments will climb to $648 a month, in part because he turned 60 and moved into a higher age bracket.

"We're trapped. We pretty much have to pay it," Naughton said.

Jonathan Hensley, Regence's president for Washington, said the rate increases directly reflect the company's costs: higher medical claims, inflation, costly prescription drugs and the expenses of treating a population that is aging and growing less healthy.

As a nonprofit company, "we don't raise premiums more than we have to," Hensley wrote in an e-mail response to questions.

In fact, Hensley said, Regence is losing money on its individual plans and subsidizes them with earnings from its group plans. He added that Regence is working actively to support meaningful health reform.

President Obama has staked his proposal on creating a public plan that would compete with private insurers. Conservatives oppose it, saying a government plan would enjoy unfair advantages and siphon members away from insurance companies.

But Naughton isn't sure it would be bad if a government plan drove a few private insurers out of business. "That only goes to prove the point" that consumers want an alternative to private insurance plans, she said.

Kathleen O'Connor, another Regence customer and founder of CodeBlueNow!, a Seattle nonprofit that works to engage the public in health reform, contends that lack of competition is one reason for surging premiums, particularly for the self-employed and others who must buy coverage on their own.

Insurers "get away with rate increases in this market because they can," O'Connor said. "I'm not sure why the insurance commissioner is not all over these rate increases."

Stephanie Marquis, a spokeswoman for Insurance Commissioner Mike Kreidler, said claims and other data submitted by the insurers supported the size of the rate increases they sought.

Kreidler knocked down only a proposed June rate increase for individual plans from Premera Blue Cross, from 9.6 percent to 6.1 percent. But he let stand all other rate requests, approving an average boost of 13 percent at Group Health and 17.6 percent at LifeWise, a for-profit arm of Mountlake Terrace-based Premera.

"Under the law, if the rates can be justified, we have to accept them," Marquis said.

The mounting premiums are driving some consumers to switch to cheaper health plans, said Deborah Huntington, vice president of sales at Seattle's Group Health.

In 2008, Group Health rolled out eight products to join its lineup of a dozen individual health plans. They included high-deductible health savings accounts, which allow people to put aside up to $5,950 annually in pretax dollars — if they have that much upfront — to pay for medical expenses.

By catering to different population segments, Group Health in the past 15 months has nearly doubled its individual-plan members to 36,000. But those new customers are facing a 13 percent rise in premiums because Group Health underestimated anticipated medical claims, said Mike Foley, a spokesman for the co-op.

North Seattle resident Gail Petersen said having more choices won't make health plans any more affordable.

Petersen, 55, and her husband pay more than $1,400 a month to Regence to cover their family of five and will pay $300 more starting in August.

One of Petersen's sons takes prescription drugs that cost $1,300 a month — not much less than his drug coverage for the whole year.

Petersen tried in vain to buy a policy with more generous drug benefits. But other insurers told her Regence's cap was the norm for individual plans.

Petersen eventually bought a second policy for her son for $350 a month through the state's high-risk pool, a public health plan for people rejected for private coverage because of health.

"What's the difference between industry standard and price fixing?" asked Petersen. "I would love to see insurance companies have a little competition."

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