Controversy builds over health insurance hikes

By Craig Schneider

The Atlanta Journal-Constitution

Alex Sabbeth’s anger went through the roof when he recently received nearly a 72 percent increase in his health insurance premium.

He sees it as proof of the health insurance industry's desire for profits.

“Out of a habit of greed, they are raising people’s rates,” said the Roswell investor and former professional violinist.

Russ Childers, an Americus insurance agent and president of the National Association of Health Underwriters, disagrees. "I really don't think insurance companies are gouging anyone," he said. "Health insurance is expensive because health care is expensive."

The issue of rising health insurance costs has gripped the nation. President Barack Obama this week introduced the issue into the health care reform debate, saying he wants to allow states and the federal government to screen and possibly block rate hikes.

Here in Georgia, state Insurance Commissioner John Oxendine has brought the controversy onto the campaign trail, discussing the matter at forums as he runs for governor. He plans to submit legislation soon that would allow the insurance commissioner to reject rate hikes on individual policies, meaning those not insured through an employer.

People with individual policies are especially vulnerable to the insurance companies, health policy advocates say. People complain that their policies are suddenly canceled and that they receive large rate increases.

Georgia provides less oversight over individual health policies than many other states. About half of the states have a mechanism for providing coverage to people with chronic medical problems. Georgia has none.

About 8 percent of Georgians who are privately insured -- some 460,000 people -- are enrolled in such individual plans. But more are joining the ranks as an unforgiving economy drives people into unemployment.

Sabbeth’s policy -- with a $10,000 deductible -- was with Blue Cross/Blue Shield of Georgia. He had been paying $241.99 a month. The company’s letter told him that the new rate would be $415.40 a month, a one-shot increase of 71.6 percent.

He had just turned 60 years old, and while he is in good health he does have noncancerous lesions removed from his face about once a year.

Reaching the age of 60 is a major benchmark for an insurance company and having a health condition can also play into the mix, several insurance industry professionals said. But even so, the increase sounded especially high, they said.

A spokeswoman for Blue Cross/Blue Shield of Georgia said privacy concerns precluded her from speaking directly about Sabbeth’s case.

In a written response to several questions from The Atlanta Journal-Constitution, Cheryl Monkhouse said that 99.7 percent of individual rate increases are below 30 percent, excluding those pertaining to a person aging.

“For 2010, we have priced our products at a level that allows for a modest operating income so that we can best meet the needs of our customers now and in the future,” she said.

Childers said he is seeing rate increases of about 35 percent over the past two years on individual policies, and about 25 percent on other policies.

But health policy advocates say that some people are having to drop their coverage altogether.

"We are seeing increases of 30 [percent] to 40 percent across the country," said Cheryl Fish-Parcham, deputy director of health policy for the nonprofit Families USA.

Sabbeth is concerned that the insurance company is trying to drive him off with the increase. He's already searching around for a new policy.

The increase would not break him financially, but he worries about others who are seeing such hikes.

"People who are less fortunate cannot afford this, and will die," he said.