Oregon faces double-digit health insurance increases

PORTLAND — Thousands of Oregonians and small businesses are facing medical insurance rate increases in the double digits.

Small business owners say they're struggling and may cut benefits or drop plans altogether.

Insurers cite the rising cost of medical care and the recession that has caused Oregonians to drop insurance — meaning everybody else has to pay more.

Insurers estimate 750,000 to 800,000 are now uninsured, in a state of 3.7 million people.

The state insurance division in recent weeks has granted rate increases ranging from 10 percent to 23 percent in premiums for small businesses — those with 50 or fewer employees.

Those are average rates. Actual rates vary widely according to people's ages, health, deductions and benefits.

The increasing burden includes a 1 percent state tax on insurance premiums to cover uninsured children. Most insurance companies will pass the cost on to customers.

Small business health premiums have more than doubled over the last nine years, cutting profits, wages and jobs, said Bill Kramer, a Portland health care management consultant who does work for the Small Business Majority, a national research organization.

Sean Moriarty, operating manager of a Portland construction sales company, says an insurance cost increase of 10 percent costs his company the equivalent of an entry-level job.

“A lot of companies are at the breaking point,” he said. “I'm dreading the day I have to go out and say to employees, 'I'm sorry. We can no longer afford this.'”

Insurers file their annual rate increases on premiums for individuals and businesses with 50 or fewer workers with the Oregon Insurance Division.

The state doesn't track or regulate insurance rates for large businesses, but many insurers said those too are outpacing inflation and hitting double digits.

Insurers say they have no choice but to raise rates to cover the increasing cost and frequency of health care claims. As more people give up insurance, insurers must spread their costs over fewer people.

“That is one reason why we need health reform so badly,” said Jack Friedman, chief executive officer for Providence Health Plans. “We need to get everyone under the tent (of the insured) because the costs for those who remain is getting pretty tough.”

The heavy use of medical machines and technology, expensive drugs and a surge in obesity also contribute to rising insurance rates, said Sue Hennessy, a vice president for Kaiser Permanente Northwest.

“Essentially, we're older, sicker and we spend less on prevention and more on taking care of the more complex patients,” she said.

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