Consumers who buy their own health insurance see steep hikes in premiums

Jan Jarvis

Mike Nash expected his monthly health insurance premium to increase a little next year.

But when the 52-year-old Lockheed retiree got a letter saying it was going up 43 percent — from $171 to $244 a month — he couldn’t believe what he was reading.

“This is absolutely outrageous,” said Nash, who lives in Fort Worth.

Earlier in the year, Nash raised his deductible to $3,500 hoping to stave off a jump in the premium for his policy from Blue Cross Blue Shield of Texas. With no chronic medical problems, he couldn’t understand why his rate would go up so much.

“I’m a healthy, nonsmoking person who has never used this policy one time,” he said.

Across North Texas and around the country, consumers who buy their own health insurance are seeing steep hikes in premiums.

Over the last decade, premiums have gone up far faster than the rate of inflation, leaving families struggling to make ends meet, said Ethan Rome, executive director of Healthcare for America Now, a national grassroots coalition.

“A big part of what is happening is insurance companies continue to make record profits, raise rates to jaw-dropping levels, do so without any justification and blame it on the new healthcare law instead of their greed,” he said. “In this tough economy, people simply can’t afford these kinds of rates.”

Nationwide, premium increases for individual policies are averaging 20 percent, according to a survey by the Kaiser Family Foundation. Roughly 3 out of 4 people with nongroup insurance report premium increases, the survey found.

As of early October, the highest increase that the Texas Department of Insurance has seen was 7.5 percent on health insurance.

Blue Cross Blue Shield of Texas spokeswoman Margaret Jarvis declined to comment on Nash’s case, saying their company does not discuss specific premium increases. But she said the company — which insures 4.5 million people statewide — makes its pricing decisions based on the cost of medical care for its covered population.

“Some of our members will see higher — or lower — premiums based on a number of factors,” she said. “For example, an individual’s premium can be influenced by age, the regional cost of medical care or their benefit selections.”

Recent premium hikes for individual health insurance plans have triggered outrage across the country.

Increases of 12 to 18 percent have gone into effect in Virginia, Wisconsin and Iowa. In New Mexico, Blue Cross Blue Shield proposed an average increase of 21 percent. In 2009, Blue Cross Blue Shield of Michigan proposed a 56 percent increase for some plans. And in California, a 39 percent increase for 2011 led regulators to reject the hike.

Health insurance companies blame increasing medical costs, an aging population and healthcare reform for driving up the cost.

The federal government isn’t buying it.

Unbiased analysts have reported the Affordable Care Act will increase costs by 1 or 2 percent, said Jay Angoff, director of the Office of Consumer Information and Insurance Oversight for the Department of Health and Human Services.

“For a big sophisticated company to say or imply that any significant increase is due to the Affordable Care Act is just ingenuous,” Angoff said. “To attribute any substantial increase to the Affordable Care Act is not a reasonable position.”

A study by Families USA blamed healthcare spending, which increased 70 percent between 2000 and 2009, for higher premiums. The group also cited weak or nonexistent regulation of the insurance industry and too little competition as reasons for premium increases.

To prevent unjust premium hikes, the federal government announced in August that it would issue $46 million in grants to states to improve oversight of health insurance premiums and take action against insurers seeking unreasonable rate hikes.

For years, certain states, including Texas, have not had much legislative authority to fight high rates, Angoff said.

“Under the current practice, Texas does not review rate increases of less than 50 percent,” he said. “That means some big rate increases are never reviewed.”

Even under the current laws, most states do more to review rates than Texas does, he said.

The Texas Department of Insurance has the authority to require companies to file forms about their policies, said John Greeley, public information officer for the department. But the law does not require the department to review rates and compare them to any standard.

Only when rates increase by more than 50 percent from one year to the next can the state ask the insurance company to justify the premium.

“It is hard to imagine anything more outrageous,” Rome said. “It’s not a law designed to protect consumers; it’s designed to protect insurance companies.”

That changes in January when the federal government can require insurance companies to publicly justify unreasonable premium increases on their websites.

Texas, which received a $1 million grant from the federal government to crack down on insurance providers, plans to spend it to expand resources and review all rate increase filings in excess of 25 percent.

As part of the new federal law, insurance companies will be required to spend at least 80 percent of premium dollars on healthcare instead of overhead, salaries or administrative expenses.

“Right now, corporations make excessive profits and pay their CEOs unprecedented salaries,” Rome said. “Forcing companies to justify increases is the first step toward regulating these increases.”

Those that don’t follow the law could be forced to provide a rebate to consumers.

But that could come too late for Nash, who retired too early to qualify for retiree health insurance through his employer . He’s been on the phone with Blue Cross trying to get the rate reduced and is still in disbelief.

“It should not be for me to battle and battle with my insurance company,” Nash said.

Jan Jarvis, 817-390-7664

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