$27 Million In Higher 2008 Medical Bills Are The Chief Factor In A 22.5% Rate Increase For LifeWise Individual Members

Long-Term Solution is Increased Emphasis on Prevention and Evidence-Based, Cost-Effective Care

Source: LifewiseWa.com



MOUNTLAKE TERRACE, WA (November 1, 2007) – Noting “it’s imperative we develop long-range solutions to slow the rate of medical-care cost increases,” LifeWise Health Plan of Washington announced today that it projects paying an additional $27 million in medical bills for its members in 2008.

Rising medical-care costs are the chief factor driving a 22.5 percent rate increase for LifeWise individual products, effective January 1, 2008. Notifications to LifeWise’s nearly 90,000 members are being mailed this week.

About $22 million of the higher 2008 medical bills will result from higher prices for medical treatment, and increased use of prescription drugs, doctor visits, hospitalizations, and new medical technology.

Another $5 million in higher medical bills will be driven by a new state law requiring expanded coverage for mental health treatment. The first phase of this new law takes effect January 1, 2008.

“We understand that this rate increase puts a strain on our members’ pocketbooks,” said Jeffrey Roe, president and CEO of LifeWise Health Plan of Washington. “Rate increases are an unfortunate part of healthcare today, and we are not pleased about having to raise premiums to this extent.”

Roe noted these medical-cost increases are occurring in an environment of very slim health plan profits. “The vast majority of the premiums we collect go to pay for our members’ medical bills,” said Roe. “Profits from our LifeWise individual business have been 2 pennies on the dollar over the past five years.”

Smaller, contributing factors include commissions, premium taxes and high-risk pool assessments, operating and disease management expenses and an adjustment for premium adequacy.

“The rate increase is a symptom – not the cause – of the dramatic increase in medical-care costs,” he said. “We need to focus on a long-term solution to curb rising healthcare costs. We believe that long-term solution is a combination of healthier lifestyles, and more cost-effective medical treatment when medical care is required.”

LifeWise’s approach is consistent with the direction set by Governor Gregoire and the Blue Ribbon Commission on healthcare. In its January 2007 report, the commission concluded, “No other strategy can compare to healthy lifestyles in terms of improving health and stretching our healthcare dollars.”

The commission also recommended “a system in which every dollar spent goes only toward the most appropriate, highest quality treatment delivered in the most cost-effective way.”

Roe identifies innovative product design as one part of the solution. “Our product portfolio, introduced in January, includes first-dollar coverage designed to encourage regular preventive care and reward healthier lifestyles,” he said.

The innovative benefits include 100 percent coverage of preventive screenings such as pap smears, cholesterol screenings, blood glucose tests, and bone density tests on most plans. The deductible is waived for mammograms on all plans and for office visits on most plans. Coverage for alternative care, including acupuncture and naturopathy is available on all plans. All LifeWise members are eligible for health and disease management programs and use of the 24-Hour NurseLine.

In addition to collaborating with its members, LifeWise advocates working with physicians, hospitals, employers and legislative leaders to identify and standardize “best practice,” cost-effective medical care.

“More care doesn’t necessarily mean better care,” said John Castiglia, M.D., chief medical officer for LifeWise. “Across the country there is research demonstrating a high degree of variation in the cost of care without differences in outcomes or customer satisfaction. We are working with physicians and hospitals to implement evidence-based best practices that deliver the highest value for customers.”

“LifeWise has been active in this effort,” he said. “Through our Quality Score Card, pharmacy programs, and elsewhere, we are working closely with physicians in Washington to promote prevention, and when care is needed, the most cost-effective and high quality treatment.”

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