Corporate Research Group’s Weblog

WellPoint, which is seeking individual plan premium hikes of up to 39% in California, isn’t the only health plan to try to push through big increases over the past 12 months.

Blue Cross Blue Shield of Michigan (Detroit) sought to raise rates an average of 56% for individual health plans, but compromised with state regulators on a 22% increase for 190,000 individual members.  WellPoint – in Connecticut – sought to raise 2010 individual health plan rates in the 22% to 30% range, but received a 13% to 20% increase. 

Independence Blue Cross (Philadelphia) sought to raise rates 18% to 29% on average in three of its money-losing Personal Choice PPO individual health plans.  However, it ended up simply dropping the plans in question, offering members the choice of two new options: one with similar benefits but much higher premiums, the other with more affordable premiums but high deductibles (and HSA compatibility).

As shown below, the original Independence filings with Pennsylvania regulators provide some sense of how the relationship between premiums and costs can fluctuate in the individual market — leading sometimes to substantial losses in some products.  (The charts below were published in our 2009 report The Coming Explosion in Individual Health Insurance using data from the filings). 

In the case of WellPoint, the company says losses in the California individual product are tied to adverse selection and the down economy; i.e., the sick tend to keep their insurance, while the healthy tend to drop coverage — again, causing costs and premiums to get out of whack.  It really is a clear argument for some type of universal coverage — even mandated coverage — to protect the risk pool.