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Learning why health insurance rates go up

Health insurance rates are going up and policies are changing for many people who have an individual plan or work at a small business. Those increases can be maddening and mystifying.

If you have the stomach for reading the fine-print on your insurance policy, a measure that’s poised to clear the legislature will make the reasons for rate hikes more transparent. Because of federal health reforms and efforts by Washington Insurance Commissioner Mike Kreidler, insurance companies will have to disclose the details when rates go up.

"People, when they get double-digit rate increases, have make the hard decision - 'Can I afford to keep this or not?' - because it is such a heavy cost impact on them," says Kreidler, noting that health insurance is often the second biggest household expense, after the mortgage.

The Office of the Insurance Commissioner reviews rate increases, to make sure they’re justified.

"Hundreds, if not thousands, of people call my office when we have rate increases, and say, 'Why are you saying this is justified? Don’t you know what this is doing to me?'" says Kreidler. "And I cant even tell them what the cost drivers are."

House Bill 1220, which has passed both the state House and Senate (but still needs final reconciliation), will change that. An explanation of all rate increases will have to be publicly available – before anything’s approved.

Kreidler predicts it will reveal one important thing to the public. Even though he has sparred with the insurers, he says they're often not to blame for cost increases:

"Doctors and hospitals charges, and what insurers have to pay out, that's where we should be focusing our energy," he says, "because that’s where the big bucks go. It's not the CEO salaries that drive this."

One of the state’s biggest insurance companies, Premera, initially fought against Kreidler's bill in the legislature, but agreed to a compromise that aligns it closely with new federal rules. The new federal health law requires similar disclosure, but only if rates go up by over 10%.

In the meantime, both Group Health and Regence, which dominates the market for individual and small business insurance, have submitted rate increases this year. Although they may blame new federal rules for the increases -- rules that eliminate copays for preventive care and cut the lifetime limits on cancer patients -- Kreidler says those changes only made a small impact on insurance costs.

According the Office of the Insurance Commissioner, these are the market shares of the top three insurance companies.

Individual market:

  1. Regence (Blue Shield) - 54.5% (includes Regence, Regence of OR, and Asuris)
  2. Premera (Blue Cross) – 31.2% (includes Premera’s company, Lifewise)
  3. Group Health Cooperative - 13.88% (includes GH Co-Op, GH Options, and Kitsap Physicians Service)

Small group market:

  1. Regence – 62.39%
  2. Premera – 17.44%
  3. Group Health – 13.99%


Keith Seinfeld is a former KNKX/KPLU reporter who covered health, science and the environment over his 17 years with the station. He also served as assistant news director. Prior to KLPU, he was a staff reporter at The Seattle Times and The News Tribune in Tacoma and a freelance writer-producer. His work has been honored by the American Association for the Advancement of Science (AAAS) and the Knight Science Journalism Fellowships at Massachusetts Institute of Technology.