By Felice J. Freyer, The Providence Journal, R.I.

Feb. 9–Rhode Island Health Insurance Commissioner Christopher F. Koller ruled late Monday that insurer Blue Cross can increase premiums for its Direct Pay plans by an average of approximately 7 percent.

That’s less than what Blue Cross & Blue Shield of Rhode Island originally proposed, and less even than the rates it agreed to in consultation with the attorney general’s office. Last month, the attorney general and the company agreed that a 9.5-percent average increase was justified.

But Koller said he found elements in the Blue Cross proposal that their agreement did not address.

Blue Cross may accept the decision or appeal it in court.

Direct Pay is a group of insurance plans, offered only by Blue Cross, for 14,000 people who do not have access to employer-based insurance or government programs, such as Medicare. People who are self-employed or unemployed and early retirees are among those who choose Direct Pay. Koller called the subscribers “the most vulnerable purchasers of commercial health insurance.”

Blue Cross had originally proposed an average increase of 10.2 percent. At a public hearing on Jan. 19, subscribers testified that they could not afford to pay that much more. Assistant Attorney General Genevieve Martin said that an actuarial study by her office supported a 9.5-percent increase, and Blue Cross agreed.

Koller expressed two problems with the agreement.

First, Blue Cross included costs for state-mandated services for special-needs children in its rate increase. But the insurer did not show what proportion of Direct Pay customers were beneficiaries of those programs, so it wasn’t clear how much, if anything, customers should contribute to their cost. Koller disallowed that part of the increase.

Second, Blue Cross included the state premium tax in its calculations of the rate increase. But Koller objects to Direct Pay customers paying for the premium tax, because they are a “vulnerable” group.

Removing those two elements reduced the increase to an estimated 7 percent. There are many versions of Direct Pay, however, and the exact increase will vary from plan to plan.

Lt. Gov. Elizabeth Roberts, who opposed the attorney general’s agreement on the 9.5-percent increase, issued a statement Monday saying that 7 percent was still too much. “I fear many will see health insurance becoming simply too expensive — and they will have nowhere else to turn,” she said.

Koller noted that his reviews of rate increases can’t make health insurance affordable. Only health-insurance reform can do that, he said.

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