Blue Cross To Request Rate Hike

flatline I’ll give you a second to catch your breath. According to The Providence Journal, Blue Cross Blue Shield of Rhode Island CEO James Purcell will ask the state to approve premium rate increases* in May, citing rising costs and increased use. But that new office building downtown? Nope, that was a cost-saving measure.

Purcell said financial analysts determined it would be cheaper in the long term to have everyone working in one location.

Purcell takes hospitals to task for the reimbursement increases, that they negotiated for in 2009, “‘Hospital CEOs need to understand that this is a different environment,” he said’. That sound you hear is emergency room doors slamming shut. (Mr. Purcell, you may need one of these some day.)

The state’s referee? gatekeeper? brake pad? in these matters is supposed to be the Rhode Island Health Insurance Commissioner. But what good is it to knock down the requested rate increase in March, only to have a new request for double-digit increases two months later? The value of this agency eludes me completely. And it seems certain that a few more employers will be dropping the Blue Cross program altogether.

*This request is for large and small group rates. Direct payers have had at least five rate hikes in as many years.

6 thoughts on “Blue Cross To Request Rate Hike”

  1. On that, we completely agree. Health care costs are rising faster than inflation, and faster than wages, so until that’s brought under control, insurance premiums are going to be increasing too fast, too. They’re not sustainable at all.

  2. Fair enough. This may not have been my finest piece and I will try to look at that bill. However, as to whether BCBS gets what they are asking for, anyone who has haggled over a sombrero knows the drill. I guess my big problem is still, whether you are a group or a direct payer, how can these rate hikes be sustainable when wages, earnings, profits lag so far behind?

  3. No, actually, that’s wrong: BCBS doesn’t have the power in that negotiation. Lifespan does. And Care New England. The insurers can’t effectively negotiate with these big systems because they know that their subscribers will insist on having access to Rhode Island Hospital, or Women and Infants, or whatever, so they can’t credibly threaten to exclude those big systems.

    The evidence is in this report from (hey!) OHIC showing the variation in the payments made by the commercial insurers to the various hospitals in the state. Lifespan hospitals get significantly more money than the smaller hospitals for the same procedures because they have market power.

    (This is true not just in New England, but everywhere. As hospitals consolidate, they gain more and more market power, which limits the ability of insurers to hold down costs, which they desperately want to do.)

    As for what we get out of OHIC, apart from ensuring that insurance offered in the state conforms to state law, offers the mandatory coverage, etc, they do effectively regulate insurance rates. BCBS is asking for a rate hike, but I’ll bet you $5 they don’t get what they’re asking for.

    If you’re interested in ideas to hold down the cost of health care and therefore the cost of insurance, check out 2010-H-7500, which I don’t think is a particularly great solution, but it’s an interesting starting point for a discussion.

  4. I meant that BCBS negotiated the rates. I agree that they have the power, that’s why it seemed disingenuous for them to be whining. My point regarding OHIC is, what do we get out of it? They can’t do anything really.

  5. I’m sorry, but this post is entirely misinformed.

    There are many aspects of the healthcare system where the insurers are the bad guys, and yes, the new BCBS building is kind of offensive, but when it comes to healthcare costs, the majority of the blame has to go to hospitals and hospital systems like Lifespan.

    Insurers and hospitals negotiate rates, but which party do you think has the power in those negotiations?

    OHIC regulates insurers, and approves rate increases, but Koller doesn’t have the power to set prices, and prices keep going up.

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