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PacificSource should provide more details to justify its proposed rate hike on small businesses, according to a new OSPIRG Foundation analysis. If approved, the insurer will raise rates 5.56% on average beginning in July, affecting 35,224 Oregonians enrolled in coverage through a small business employer.
The group noted that many ratepayers would see large increases above the proposed average increase. Over 27 percent – 11,000 Oregonians – are enrolled in small business coverage that would see increases of between 8 percent and 14 percent.
“Small business health insurance coverage is already unaffordable for many,” said OSPIRG Foundation’s Laura Etherton, “Given that so many people would see an 8 percent or greater increase makes it particularly important for PacificSource to thoroughly justify this rate increase.”
Key findings in OSPIRG Foundation’s official comment on the rate filing include:
• The prescription drug trend numbers are not fully explained in the initial filing. PacificSource expects drug costs to rise 7% in the year ahead, despite the fact that prescription drug costs fell by almost 1% last year. The insurer did not show the calculations it used to obtain the 7% figure.
• PacficSource does not show the detail needed to support its medical trend numbers. PacificSource did not show how it used actual claims data to calculate the underlying medical trend for the last year. The insurer also did not show sufficient support for how it developed anticipated medical trend.
• PacificSource does not show sufficient support for changing how it varies premiums for different businesses. The insurer proposes reducing the rating factor for businesses in the Portland metro area, the Salem area, and in the mid-Willamette Valley, while raising the rating factor for those in Eastern Oregon. It is also changing how much more and less each plan costs relative to each other. PacificSource does not sufficiently detail the support for these rating changes.
• Premiums and out-of-pocket costs will be unaffordable for many businesses and employees. This is true across the board, but particularly notable for businesses with older employees in certain geographic areas of the state.
• PacificSource reports making efforts to reduce costs and improve care. The insurer lists a set of encouraging initiatives to better coordinate care, improve quality and reduce waste in a variety of areas, and indicates some promising results in some areas. It is not clear from the filing whether the insurer is doing everything it can to lower costs. We encourage the insurer to expand its efforts, and share its overall approach in this area as part of its future rate filings.
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