September 4, 2007
To the Editor:
Blue Cross of Northeastern Pennsylvania recently filed a rate increase request with the state’s Department of Insurance. This action was surprising, to say the least. In the filing, NEPA Blue Cross is asking for an almost $7 million total increase affecting 56,000 ratepayers in the Northeast.
Hardest hit, on a percentage basis, will be Cooperative Program subscribers who face a 25% increase over their current rates. Medigap Security, with over 38,000 seniors as subscribers, faces rate hikes ranging from 5 to 11 percent. Additionally, Special Care and Major Medical subscribers would be charged with a 9.8% increase, while Student plan subscribers would have to pay 15% more.
We are all too familiar with the rising costs of health care, and it would seem inevitable that companies such as NEPA Blue Cross would need to raise rates from time to time to meet these rising costs. But to residents of the Northeast, who have followed the actions of NEPA Blue Cross in recent years, this rate increase request seems especially outrageous.
NEPA Blue Cross is sitting on a surplus of over $400 million. Just this year, they attempted to give away $175 million to various health care entities. They were only prevented from doing so by court action, but the outcome of that action is still pending. Keep in mind that NEPA Blue Cross is a non profit company, whose surplus was generated by ratepayer dollars and money earned by investment returns on those dollars. So, in essence, NEPA Blue Cross is claiming that even though they have a surplus of over $400 million in their coffers and attempted to give away $175 million of that surplus, they have no choice but to take $7 million from seniors, students, and those without the benefit of group coverage - this from a non profit company whose stated mission is to provide “more affordable health care” to their subscribers.
As the elected Representative of the residents of the 120th Legislative District, I believe these increases are entirely unacceptable. The facts show that NEPA Blue Cross doesn’t need any more ratepayer dollars. Enough is enough.
I will be expressing these sentiments and my adamant opposition to this request to Governor Rendell and his Insurance Department. I would strongly encourage any interested parties to express your comments or objections to either of the following individuals by September 17:
Ms. Cherri Sanders-Jones
PA Department of Insurance
Insurance Product Regulation and Market Enforcement
Room 1311 – Strawberry Square
Harrisburg, PA 17120
Mr. James Sabater
PA Department of Insurance
Insurance Product Regulation and Market Enforcement
Room 1311 – Strawberry Square
Harrisburg, PA 17120
This rate increase request also adds even greater urgency to the need for a Consumer Advocate for Insurance. Legislation that I’ve co-sponsored, House Bill 1121, creates the Office of Consumer Advocate (OCA) for Insurance. Like the current OCA which has successfully represented utility customers in matters involving their utility service, an Insurance OCA would provide that same service to all of the state’s insured. This is vital because while there is obviously well-funded, expert representation for the insurance companies, the average insurance consumer has no such representation in matters before the Insurance Department. The complexity of these rate cases is such that insurance consumers need an advocate who can bring a full range of technical and legal arguments to rate cases on their behalf. An Insurance Consumer Advocate would be that resource.
This legislation has been introduced many times in past sessions. It’s past time to provide these important consumer protections.
Sincerely,
Rep. Phyllis Mundy
120th Legislative District
PA House of Representatives