Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: TUESDAY, October 11, 1994 TAG: 9410110111
SECTION: BUSINESS PAGE: B8 EDITION: METRO
SOURCE: ASSOCIATED PRESS
DATELINE: RICHMOND LENGTH: Medium
Trigon Blue Cross Blue Shield's group rates rose 0.1 percent in the first half of 1994, while its ``Healthy Virginian'' rate for individuals jumped 7.4 percent.
Some individuals, including elderly and disabled people, who are covered by Trigon's biggest Medicare supplement policy saw increases of more than 9 percent.
Some consumer advocates said the pattern of rising premium rates to individual policyholders is unfair. Richmond-based Trigon gets a multimillion-dollar annual state tax break in return for selling insurance to anyone who wants to buy it.
``I'm concerned about whether people who don't have a group's purchasing power to get them the best rate are being treated fairly,'' said Jean Ann Fox, president of the Virginia Citizens Consumer Counsel.
Kathleen O'Reilly, director of the National Insurance Consumers Organization, said individuals should not have to subsidize lower rates for businesses and other groups.
``It's presumptive of a gross, inappropriate cross-subsidization'' to support Trigon's group-policy business, she said.
Trigon's individual policyholders also get a smaller proportion of their premium dollar back in claims than do those covered by group policies.
Trigon's filings with the state Bureau of Insurance show the company paid people covered by group policies 84 cents for every dollar paid in premiums. Under the ``Healthy Virginian'' policy, its major policy for individuals, the company paid 66 cents in claims for every premium dollar last year.
The insurer paid 73 cents for every premium dollar under its largest Medicare supplement policy. Four of Trigon's newest Medicare supplement policies had payouts of between 32 and 44 cents for every premium dollar.
Prudential Insurance Co., one of the largest for-profit health insurers, last year paid 91 cents in claims for every premium dollar received under individual health policies and 78 cents on its group policies, according to filings with the National Association of Insurance Commissioners.
Trigon's executive vice president, C. Wyndham Kidd, said higher overhead costs for individual policies are a factor in the lower payout rates.
``It is more expensive to administer, sell and market nongroup [policies] one at a time,'' he said.
Most Trigon customers are covered through group policies sold to their employers, and the market is competitive. Kidd said if other insurers want to pursue aggressively the most profitable customers, which are businesses that purchase group plans, then Trigon has to be willing to match rates or lose business.
Competition for individual policyholders is less intense. Trigon has about 60,000 regular individual policies and 155,000 Medicare supplement policies. Trigon has a total of 1.4 million customers in Virginia.
by CNB