Anthem requests 5.8 percent rate hike

GARDINER – Maine Bureau of Insurance officials and Anthem Blue Cross-Blue Shield executives met Thursday for what has become an annual rite among Medicare supplement providers: the company’s request to increase monthly premiums.

Anthem is one of several insurers currently requesting permission to increase rates for the supplemental Medicare coverages called companion plan programs. If approved, the company would raise rates an average 5.8 percent among about 41,000 Mainers enrolled in the programs.

The bureau has approved rates for Anthem in each of the past four years. The new rates could push premiums for some subscribers to more than $90 per month, said John Carr, president of the Maine Council of Senior Citizens.

A bureau comparison shows Anthem, in spite of the annual increases, among Maine’s lowest-cost providers of the companion programs. James Parker, general manager of Anthem operations in Maine, told state officials, including Bureau of Insurance Superintendent Alessandro Iuppa and Assistant Attorney General Andrew Black, that insurers also wanted to stop the treadmill of increasing rates.

“It is not a good long-term strategy to try to maintain your customer base by increasing prices just as quickly as you can,” Parker said.

The customer base for companion care policies are senior citizens and others eligible for publicly funded Medicare coverage. That coverage is divided into two parts. Medicare A covers essential in-hospital care and is generally provided without charge. Part B pays for office visits and other outpatient care, but requires that recipients pay a monthly premium.

Medigap plans, such as the companion policies discussed at Thursday’s hearing, provide broader coverage to supplement the Plan B programs. Anthem is one of 15 companies in Maine providing such programs.

Company officials said, based on Anthem’s projections for increases in administration and health care costs, the company would not see any increased profit from the proposed new rates. But those projections, they said, were based on foreseeable factors. To hedge against unforeseen events, the company asked to implement an additional risk charge as part of its new rate plan.

“It’s kind of like an insurance payment, but for our own insurance,” said James Bucherri, an Anthem vice president and manager of regional products.

All specific discussions of cost, profit and industry trends were held in a closed executive session. No information was provided as to the size of the risk charge, proposed as a percentage of revenue from the companion plans. Bucherri said unforeseen events included patients moving between health care providers and other factors.

He also mentioned the current shortage of flu vaccines, saying that if 1 percent of Anthem’s companion subscribers contracted serious cases of influenza, it would consume funds equal to twice what the company was proposing as a risk set aside. Prodded by life and health insurance expert Richard Diamond, the company agreed that if such circumstances did not arise, however, the risk charge would constitute additional profit.

Company officials also emphasized the rate increase would generate an additional $1.37 million per year in additional state taxes paid by the company.

The Insurance Bureau had no information suggesting that increasing rates had thus far pushed seniors out of the supplemental coverage, according to bureau attorney Thomas Record. But Carr said 188,000 seniors in Maine who live on fixed income of $23,000 a year, including Social Security and pension, could tolerate only so many annual increases, and there appeared to be no relief in sight.

“We believe Medicare costs are going in the wrong direction,” he said. “With the re-election of President Bush, there is no reason to believe that will change.”

Anthem is also requesting an average 14.7 percent increase for its individual preferred provider organization products, its HealthChoice programs. The HealthChoice hearing is scheduled for Friday, Nov. 12, at 9 a.m. at the Cross State Office Building in Augusta.