Bill to rein in individual health plans advances

A bill to give power back to the state to disallow rate increases for individual health coverage has taken a critical step closer to passing the state Legislature, overriding opposition from Washington's largest insurance providers.

The bill passed the House 68-21 on Friday and is now expected to reach Gov. Christine Gregoire to be signed into law.

Under Senate Bill 5261, proposed rate changes for individual plans will again require approval by the state insurance commissioner, as is the case for small-group plans. Washington gave up oversight over individual rates in 2000 to lure back insurers who had pulled out of the individual market.

The bill now has to go back to the Senate because it has two amendments. The Senate passed the measure 31-18 in a January vote, and the insurance commissioner expects the Senate to approve the amendments.

Supporters hope the bill will put a brake on rising premiums, which for some customers have jumped by 20 percent or more in the past year. But insurance companies said it would penalize insurers while ignoring the root causes of high health costs.

"Suppressing rates artificially does not address the underlying issues," said Jeff Roe, president and chief executive of LifeWise Health Plan of Washington. "This is like trying to avoid a storm by demanding a different weather forecast."

The bill gives state Insurance Commissioner Mike Kreidler the authority to reject "unreasonable" rate proposals. Kreidler also would have the power to review each insurer's actual claims costs against projections, and to order any excess profits refunded to the state.

Yet even Kreidler acknowledges that the legislation will offer limited relief for consumers feeling pinched by double-digit rate increases. In 2007, insurers in Washington planned to raise rates for small-group plans by an average of 11.5 percent; the state approved 10.7 percent, a reduction of less than one percentage point.

Still, Kreidler said individual consumers need an advocate to verify that rate increases are justified.

"If the insurance companies have been giving honest numbers all along, they have nothing to worry about," Kreidler said.

Roe, however, argued that the real reasons for rising premiums are an aging population and increased use of technology.

LifeWise, a subsidiary of Premera Blue Cross of Mountlake Terrace, lost $2.3 million in Washington last year. Any pressure by the state to hold down premiums will simply widen the loss, Roe said.

Roe predicted the bill would "reinforce Washington's reputation as a highly regulated insurance market" and ultimately hurt consumers by stifling competition and keeping new insurers out.

This story, published March 4, 2008 was corrected on March 4. A bill to give power back to the state to disallow rate increases for individual health coverage has passed the House, but needs to return to the Senate for passage of amendments before going to the governor to be signed into law. The original version of this story incorrectly said Senate Bill 5261 had passed the entire Legislature.