February 22, 2010

Testimony in Opposition to Health Insurance Rate Increases

Dear Commissioner Koller:

I appreciate the opportunity to submit testimony as part of the health insurance rate factor review and the thorough efforts of the staff and office of the Health Insurance Commissioners Office in soliciting and collecting these important testimonies. I would like to begin my testimony with a quote from the recently released report entitled, "Variations in Hospital Payment Rates by Commercial Insurers in Rhode Island" where the document specifies the "Powers and Duties of the Office of the Health Insurance Commissioner" when stating,

"OHIC is responsible for holding health plans in RI responsible for their statutory obligation to improve the affordability of RI’s health system," (p.6).

Understanding that mandate, I urge Commissioner Koller to significantly reduce the requested rate increases.

Having attended two recent Health Insurance Advisory Council meetings, and being a Wakefield resident who relies on South County Hospital (an unaffiliated community hospital), I find it appalling that the same insurers who have either under-compensated SCH, or over paid the larger mega-hospitals, can justify a double digit rate increase.

The January report goes on to state,

"Payments to hospitals comprise approximately 40 percent of health insurance premiums. Variations in hospital payment rates may affect the affordability of health insurance in RI," (p.6).

We later see the reports findings summarized in the following table:

Per Diem Payments
Payment Per Stay

Until we definitively know that there are no efficiencies to be gained by lowering the payment rates of the affiliated hospitals to that of the unaffiliated hospitals, I believe the Office of the Health Insurance Commission has an obligation to postpone the proposed increases. Of course we know the larger hospitals would never agree to such a change, yet I feel it incumbent upon the Insurance companies to positively account for the necessity of the higher rate, or be forced to pay all hospitals the same, or reasonably similar, rate.

Upon viewing the disparities among hospital provider reimbursements, I find it nearly impossible to reward the silence surrounding the inequities, by approving the requested rate hikes. Until the insurance companies provide explanations for the substantial differences in reimbursement rates, the OHIC has no obligation to approve these rates. As state and local government offices, individual business owners, and families all are forced to operate more efficiently on leaner budgets, I feel it is time for the insurance providers to implement change and aggressively seek innovations in providing their services.

I do understand that the affiliated hospitals and insurance companies dispute the findings and the methodology of the study regarding the specific data set used, however, until they come forward with a reasonable explanation for the differences, I base my testimony on the report as filed.


Teresa Tanzi

57 Hillcrest Road Wakefield, RI 02879