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Health insurance

September 4, 2008

Blue Cross to aid with medical fees hike

Firm to use $8.85M of $462M surplus to help with rising costs in four plans.

By Jerry Lynott jlynott@timesleader.com
Business Writer
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WILKES-BARRE – Blue Cross of Northeastern Pennsylvania said it will use a portion of its $462 million surplus to pay for rising medical costs not completely covered by recently filed rate hike requests.

The not-for-profit health insurance company requested permission from the Pennsylvania Insurance Department last month to increase annual premiums by $6.7 million for four plans affecting nearly 49,000 subscribers.

But the additional income will cover only part of the rising costs for medical services, prompting Blue Cross to use $8.85 million of the surplus, according to documents filed Aug.7 and 8 with the insurance department.

“Our goal is to strike a balance between the increase actually needed and a more reasonable increase subsidized by surplus dollars,” the company said in its filings.

Blue Cross spokeswoman Michelle Davidson said Wednesday the company has accessed its surplus in the past to cover rising medical costs.

“From 2003 to 2009, we expect to subsidize these types of products by more than $60 million,” Davidson said.

The rates affect the BlueCare Student, BlueCare Security and Special Care programs and the BlueCare Cooperative plan, touching approximately 8 percent of the company’s estimated 600,000 plan members in 13 northeastern and north-central counties.

To fully cover the costs, the premiums would have to be raised much higher than what was sought, the company said.

The largest increase would have been 126 percent for 690 members of the BlueCare Student program. But with higher copay charges and a subsidy of $337,000, Blue Cross said rates will rise 15 percent. The rate hike will produce $55,000 in additional annual income.

Nearly 4,870 Special Care members faced a 44 percent increase, the company said. Blue Cross will subsidize the plan with $1.08 million from the surplus, reducing the rate hike to 9.8 percent. The higher premiums will produce $334,000 in additional income.

The largest number of plan members affected subscribe to the BlueCare Security plan. To stand on its own, the increase would have been 19.8 percent for 36,356 members. Blue Cross reduced the increase to 9.8 percent with a $3.34 million subsidy. The rate hike provides an additional $3.27 million in annual income.

The company said it will derive $3.1 million in annual income from the 17.5 percent rate increase for 6,883 members of the BlueCare Cooperative plan. Without the $4.1 million in subsidies, Blue Cross would have had to increase premiums by 42 percent.

The rate hikes pending before the department would go into effect next January.

Department spokeswoman Melissa Fox said comments on the rate hikes are considered as part of the review process.

After the review there could be one of three outcomes, she explained. The department could agree and grant the increase, disagree and ask the company to resubmit its request or agree but modify the rate.

Comment on filings

The Pennsylvania Insurance Department accepts written or email comments, suggestions or objections to the rate filings within 30 days after their Aug. 23 publication in the Pennsylvania Bulletin. Correspondence should be sent to Cherri Sanders-Jones, Insurance Department, Insurance Product Regulation, 1311 Strawberry Square, Harrisburg, PA 17120, csandersjo@state.pa.us.

Jerry Lynott, a Times Leader staff writer, can be contacted at 570 829-7237.

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