Insurer loses Round 2 in bid for 50% rate rise

Md. insurance chief reaffirms ruling against CareFirst

September 29, 2001|By M. William Salganik | M. William Salganik,SUN STAFF

State Insurance Commissioner Steven B. Larsen has again denied CareFirst BlueCross BlueShield a 50 percent increase in premiums for its "open enrollment" health policies.

Larsen initially denied the increase for existing policies in April. At the same time, he sharply cut proposed rates for a new type of open enrollment policy. CareFirst filed an appeal of his rulings in May, and Larsen, after a hearing and review of the record, upheld his initial decision in a ruling issued Wednesday.

While the number of open enrollment policies is small - CareFirst says it has about 1,000 members covered by them - they mean millions of dollars in hospital discounts to CareFirst and other insurers, and they have been the subject of policy debate for years.

The policies, which are issued without medical exams, are designed to cover people who would have difficulty getting conventional insurance. In return for offering the policies, which reduce the number of uninsured, the state commission that sets hospital rates offers insurers a 4 percent discount.

That meant $30.6 million in discounts for CareFirst last year, Larsen noted in his ruling, easily offsetting the $2 million in losses CareFirst reported because claims on the policies exceeded premiums.

CareFirst has 30 days to decide whether to file a court appeal. CareFirst appealed to Larsen on the grounds that he had exceeded his authority in cutting the premiums below CareFirst's costs. CareFirst had no comment on Larsen's ruling, said James M. Day, a spokesman for the insurer.

CareFirst has been charging $131 a month for the existing open enrollment policies, and was seeking approval to charge $197. Larsen's order keeps the rates at the current level.

Another part of the order dealt with a new open enrollment policy offering more benefits - to meet new requirements in state law.

CareFirst was seeking a monthly premium based on age, ranging from $217 for a 25-year-old to $889 a month for a 65-year-old.

Under Larsen's order, those rates were cut to a range of $141 for a 25-year-old to $308 for a 65-year-old.

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