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Federal agency seeks disclosure on Alaska health care costs

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Posted: Sunday, July 8, 2012 11:50 pm | Updated: 10:34 am, Mon Jan 21, 2013.

FAIRBANKS — The new federal health care law has a provision that requires insurance companies to publicly justify any increase of more than 10 percent in rates.

Sounds like a good idea. But the Parnell administration has taken the position that everything is higher in Alaska, including the annual percentage increases in health insurance.

Insurance companies should only be required to publicly justify rate increases if the jump is 17 percent or higher, the Parnell administration says.

There is something missing from the state’s logic. Alaska health care costs are high.

But it doesn’t follow that the annual percentage increase also must be higher than in locations where costs are lower.

Since 2008, most of the annual increases enacted by Primera Blue Cross, the dominant company in Alaska, and the other insurance companies, have been far above 10 percent.

Twenty-five of the 30 rate increases were more than 10 percent, meaning that public disclosure would have been required to show why the increases were reasonable.

“Clearly the 10 percent threshold is too low for Alaska and is capturing the majority of rate increases, many of which are in fact reasonable for Alaska,” Katie Campbell, an actuary for the Division of Insurance, wrote to the federal agency April 30.

She said that had annual increases of 17 percent or more been the cutoff for public disclosure, then only 13 of the 30 increases would have required public disclosure.

“The division is concerned that the inappropriately low 10 percent threshold for Alaska will result in unreasonable expectations by Alaskans regarding what constitutes an unreasonable rate increase. This will create unnecessary anxiety and use of resources by the state and by HHS,” Campbell wrote.

What I find unreasonable is the state position. If the increases are reasonable, public disclosure of the facts will not make them unreasonable. Disclosure will reduce unnecessary anxiety.

To conclude that all rate increases of less than 17 percent are by definition reasonable is unreasonable.

If the administration is concerned this procedure will cost the state more money, then it should have applied for the $1 million rate review grant in 2010 from the federal government that it rejected.

Sen. Mark Begich wrote to federal officials May 24 to say he opposes the Parnell administration request for a waiver to the 10 percent requirement, saying that posting the justification for rate increases of that level would help consumers.

He said he has little sympathy for the state’s argument about additional work, given the decision by the state to refuse a federal grant to improve service.

“I urge you to keep the 10 percent threshold in place,” Begich said. “Alaskans facing 17 percent rate increases — or even less — deserve the same information as other Americans regarding their insurance costs.”

On June 1, the federal agency rejected the state request, saying the emphasis on public disclosure outweighs any potential burden on the insurance companies, the Division of Insurance and the HHS.

Perhaps the weakest argument by the Parnell administration is that as of April 30 it had received no public comments on rate increases filed Jan. 1 and it had received no public comments on the 10 percent rate threshold.

The state has failed to advertise or promote the ability to get access to that information in any meaningful fashion. I looked on the Division of Insurance website Friday and could not find the rate filing information without asking the division.

Perhaps there has been no reasonable public response because the public doesn’t know about it.

Dermot Cole can be reached at cole@newsminer.com or 459-7530.

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