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Wednesday, September 1, 1999 - Page updated at 12:00 AM

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2 Big Insurers Stop Selling To Individuals -- Group Health, Regence Opt Out

Seattle Times Staff Reporter

Two of the state's largest health plans, Regence BlueShield and Group Health Cooperative, announced today they will no longer sell new individual insurance policies.

That means residents in most of the state, including King, Pierce and Snohomish counties, will no longer be able to buy individual plans, which are normally purchased by people who don't get insurance through their jobs or the government.

The decisions won't affect the approximately 200,000 people who already have individual policies - only those seeking new coverage.

The only remaining option for most people seeking individual coverage next year will be the state's high-risk pool. Residents in Clark County will also be able to buy a bare-bones state plan, but that won't be available anywhere else.

In recent months, 15 Eastern Washington counties have struggled with the fact that no insurers offer individual policies. And nine insurers just decided they'll no longer sell the bare-bones state plan.

Today's announcement spreads the problem to densely populated Puget Sound.

"This is no longer a rural health-care access problem," said Chris Bruzzo, a spokesman for Regence BlueShield. "It becomes a statewide health-care problem."

Insurers losing money

And this is why: In 1993, state lawmakers passed sweeping changes in the state's health-care laws aimed at insuring everyone and spreading the risk among all insurers. It was a balancing act.

But in 1995, lawmakers pulled a couple of legs out from under the plan, leaving only the provisions most popular with consumers - a three-month waiting period for pre-existing conditions and a prohibition against insurers refusing coverage to anyone.

This meant that some people only bought insurance after they became sick or pregnant. Insurers argue this is like allowing people to buy fire insurance after your home starts burning.

Claims started increasing. Premiums started rising. Healthy people started dropping out. Only the sickest stayed in.

"It becomes this Catch-22, this, `I can't afford it until I get sick,' " said Cheryl Scott, president of Group Health Cooperative.

In recent years, insurers have lost millions on individual policies.

Last year, Premera Blue Cross stopped selling new individual policies after losing more than $70 million on the individual market since 1994.

Regence and Group Health have struggled for some time about whether to continue selling the policies. Gov. Gary Locke and several lawmakers proposed a fix for the problem last spring, but the proposal never passed.

Regence told Insurance Commissioner Deborah Senn's office it was dropping out of the individual policy market yesterday. The company said it had lost $30 million on individual policies between 1994 and 1998. It predicted it would lose $6.6 million this year.

Regence also worried about the deteriorating condition of Kitsap Physicians Service, which was recently placed into receivership by Senn. Kitsap still offers individual policies in three counties, but if the company goes under, thousands more people will be looking for coverage.

Group Health decided it couldn't be the only major plan in the state selling individual policies. People have until 5 p.m. tomorrow to buy individual policies.

"It really points to the failure of the overall market," Scott said.

A few have limited options

For now, people in Jefferson, Kitsap and Mason counties will be able to buy individual policies through Kitsap Physicians Service. Residents of Asotin and Garfield counties will be able to buy individual policies through Regence BlueShield of Idaho. People in Clark County will be able to buy individual policies through Regence BlueShield of Oregon. And people in Skagit and Whatcom counties will be able to buy policies through the Northwest Medical Bureau.

But that's it.

Everyone else can still buy new policies through the state's high-risk pool, which was just re-opened after years of being dormant.

"There's not a reason to panic here," said Robert Harkins, chief deputy insurance commissioner. "This is not about people getting dumped from coverage. It's about people who are seeking new insurance. . . . We're not talking about huge numbers of people here."

But those high-risk policies are far more expensive than traditional individual policies.

And although only small numbers of people will be affected, the potential ramifications are huge. Insurers are just saying no to the current laws, and they're dropping out of coverage lines.

Insurers want changes that will increase the waiting period for pre-existing conditions, and allow them to do some pre-screening for health conditions.

"What it's going to take is a set of compromises," Bruzzo said.

Kim Barker's phone message number is 206-464-2255. Her e-mail address is kbarker@seattletimes.com

Copyright (c) 1999 Seattle Times Company, All Rights Reserved.

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