Findings, conclusion and order concerning the filing of Blue Cross and Blue Shield of Massachusetts, Inc. of proposed nongroup rates and certificates to be effective on and after September 1, ...

266 Pages·1992·9.4 MB·English

by  Massachusetts. Division of Insurance

Digitized by the Internet Archive
2013
in
http://archive.org/details/findingsconclus1992mass

W/
WV7
h 4
<~n »-
1^
. t A
The Commonwealth Of Massachusetts
Executive Office of Consumer Affairs
Division Of Insurance
280 Friend Street, Boston, 021
1
[phone]
GLORIA LARSON
C.
SECRETARY colle'cZ?^
KAY DOUGHTY
AUG
COMMISSIONER 3
1998
Uni
*_VSity
of
^osiAiic
husetts
f0ry Copy
FINDINGS, CONCLUSION AND ORDER
CONCERNING THE FILING OF
BLUE CROSS AND BLUE SHIELD OF MASSACHUSETTS, INC.
OF PROPOSED NONGROUP RATES AND CERTIFICATES TO BE
EFFECTIVE ON AND AFTER SEPTEMBER
1992
1,
Issued: February 12, 1993 DOI G92-12

Decisionon 1992NongroupRates Page2
DocketNo. G 92-12
MMM;
conversion rates, the requested composite rate increases are 39.4 percent for 31.9
CMMM CMMM CMMM
percent for 250; 38.6 percent for 500; 32.6 percent for 1000; and
CMMM
35.9 percent for 2500.
A. Background and Procedural History
Pursuant to G.L. c. 176A and c. 176B, nongroup contracts and rates must be approved
by the Commissioner of Insurance. The proceedings to review proposed rates are conducted
CMR
pursuant to 21 1 120.00. The Intervenors in this proceeding are the State Rating Bureau
(SRB) and the Attorney General (AG). Prefiling and technical conferences were conducted
with BCBS and the two Intervenors before the commencement of the hearing.
On April 29, 1992, in accordance with G.L. c. 176A, § 6 and G.L. c. 176B, § 4, a public
hearing was convened to review the proposed rates.1 Twenty-five witnesses appeared and
made unsworn statements, including Steven Tringale, Vice President for External Affairs of
BCBS, who testified in support of the filing; and Attorney General Scott Harshbarger, Anthony
Scavongelli of the SRB, Robert Restuccia and others on behalf of Health Care for All, and
numerous individuals, who testified in opposition to the proposed rate increase. Prior to the
hearing, the Division had received numerous letters and telephone calls from subscribers,
legislators and others expressing outrage at the size of the proposed increase. At the public
comment hearing, Mr. Tringale stated on behalf of BCBS that:
30 days ago Blue Cross and Blue Shield called for reform of the
non-group health insurance market. I repeat that call again today.
We
have reached a crisis point The rate increase will have a
tremendous impact on access to health insurance for our non-
group subscribers who are unemployed, who cannot obtain
insurance through their employer, or who have been rejected by
1 The public comment portion ofthe hearing was held on April 29, 1992 starting at 10:00 a.m. and 5:30
p.m., to accommodate those unable to attend the morning session because ofwork schedules.

Decisionon 1992NongroupRates Page3
DocketNo. G 92-12
other insurance carriers. We recognize that many subscribers will
be forced to switch to lower cost products or drop health
insurance coverage altogether
....
We
recognize that this rate increase is high, but it is an inevitable
consequence of the current non-group market. Since 1982 we
have lost nearly $200 million on our non-group products. Last
year alone, Blue Cross and Blue Shield loss [sic] $12.4 million on
this product line.
Tr. 3:8 (Tringale). He asked that the Division defer the hearing for 30 days so that all parties
could work together to "craft a non-group reform package," and stated that BCBS would agree
to delay the rate effective date from September 1, to October 1, 1992. Tr. 3: 1 1 (Tringale).
Since the April 29 hearing, the Division has continued to receive numerous letters and
telephone calls from subscribers, legislators, municipalities and others. These communications
primarily have offered strong opposition to the proposed rate increase because of the hardships
to individuals caused by the current economic situation in Massachusetts, the high cost of the
insurance coverage, stated to be unaffordable by many individuals, and because of concerns that
BCBS has not kept its own costs of providing insurance to a reasonable level.
Commissioner Doughty granted BCBS' request for a 30 day moratorium, and
established a working group to meet to develop reform proposals for the nongroup insurance
market After the expiration of 30 days, the hearing was reconvened. Nine witnesses testified
and 24 exhibits were introduced, during the course of nine hearing days from June 15 to July 27,
1992. I have taken official notice of portions of the record and briefs in the hearing on 1992
BCBS Nongroup Rates relating to the group conversion subsidy and the reserve contribution
BCBS
issues, as well as the scope of appeals by from the last two nongroup rate decisions. All
parties filed briefs and reply briefs.