The George Washington University Health Plan is generally raising medical premiums for people covered through associations by a range of 50 percent to more than 100 percent next year, the District's top insurance regulator said Friday.
The premium increases affect groups such as the Georgetown Business & Professional Association and the D.C. Chamber of Commerce, alliances of small businesses and individuals who might have had a harder time buying coverage on their own.
Before announcing the premium hikes the George Washington health plan signaled that it would stop offering group coverage to a number of associations when their policies came up for renewal, but D.C. regulators told George Washington that would be illegal, said Lawrence H. Mirel, the District's commissioner of Insurance and Securities Regulation.
The plan had another money-losing year in 1999, and associations accounted for a disproportionate share of its losses, Vice President Eileen Wilson said. "This plan did not rate them appropriately in the past," Wilson said.
Covering associations is more expensive than issuing group coverage through employers, partly because associations tend to include people whose medical histories would prevent them from obtaining coverage elsewhere, Wilson said. In some cases, associations are formed for the purpose of obtaining group coverage, she said.
The rate increases for the associations appear to be legal and justifiable, Mirel said. "We've looked at their numbers and we understand that they are losing money and we understand that they've got to do something if they're going to stay in business," he said.
Wilson said she could not quantify the rate increases. The Georgetown Business and Professional Association said its broker was tentatively informed that its monthly rates would go up on Feb. 1 to $305.86 from $177.22 for single people (72.6 percent), to $598.58 from $380.96 for couples (57.1 percent) and to $769.80 from $491.60 for families (56.6 percent).
"They've broken a trust as far as I'm concerned," said Arthur J. Schultz III, a Georgetown media relations consultant who is now shopping for alternatives. "They enrolled us seven years ago happy to have us, and now all of sudden they figure out that they made a mistake."
Sam Le Blanc, who owns the marketing firm Outside Interests Inc., said he can't afford the higher premiums and will probably have to settle for a policy that could entail much higher out-of-pocket expenses in the form of copayments and deductibles.
"From a business point of view, I think they had to do what they had to do to make money, but I also think it must be incredibly poor planning to raise my [monthly] rate from $490 to $770 in one year," Le Blanc said.
Schultz said only a minority of the Georgetown association's members buy the George Washington coverage, which shows that the association has other reasons for existing. But the association began offering the plan "because we found members that needed coverage and were paying exorbitant rates."
The people who benefited include Sharon Hays, whose said she faced $1,000 monthly premiums and huge deductibles before enrolling in the George Washington health plan because of her asthma. Hays, proprietor of the Phoenix, a retailer of art, crafts and jewelry, said the coverage available through the association was better and cheaper.
In a break from George Washington's past practice, association members who are not already enrolled in the association's health plan could be excluded for medical reasons, Wilson said. George Washington is giving association members the option of applying for their own individual or group policies. However, individual policies may have thinner benefits than the association coverage -- for example, Mirel said, prescription drugs may be excluded.
Prompted by complaints from associations, Mirel met with George Washington representatives Friday.
The number of association members potentially affected is unclear, but Wilson estimated it is in the hundreds or thousands.
"We have been renewing associations right and left," as well as giving association members other options, Wilson said.
But an Oct. 29 letter from George Washington to members of the Georgetown Business & Professional Association and the D.C. Chamber of Commerce said "the Health Plan can no longer offer a group plan to the GBPA and DCCC Members."
A Nov. 4 letter to members of the Georgetown association from its insurance broker said George Washington "is terminating your association coverage plan as of January 31, 2000." The broker wrote that the letter had been approved by George Washington.
Now the associations are waiting for final word on their rates for next year.
Some members of Congress have been pushing legislation that would help small businesses band together to buy health insurance, but opponents argue that the legislation would place more people beyond the reach of state consumer protections.