CHAPEL HILL, N.C. – Today Blue Cross and Blue Shield of North Carolina (BCBSNC) filed a rate request with the North Carolina Department of Insurance for a rate increase of 6.97 percent for Blue Advantage and 2.06 percent for Blue Options HSA. These requested rate increases are the lowest since 2007. Blue Advantage and Blue Options HSA currently serve more than 300,000 customers under the age of 65.

Seventy percent of Blue Advantage/Blue Options HSA members would see rate changes less than 10 percent, including almost 28,000 customers who would see rate decreases.

“Most of our Blue Advantage and Blue Options HSA customers will see smaller rate increases for 2011,” said BCBSNC President and CEO Brad Wilson. “However, the only way to make premiums affordable over the long term is to get soaring medical costs under control.”  

Rates requested for individual coverage for 2011 reflect medical trend as well as changes made to comply with the new health care reform law.

Factors in calculating annual premiums
“The primary factor impacting rates is the expected cost and use of medical services,” said CFO Gerald Petkau. “Last year 87 cents of each premium dollar we received went to pay medical costs for our customers. Other factors in our overall rate calculation include administrative costs, taxes and a contribution to the reserves we are required by law to maintain.”

After BCBSNC completes its rate calculation, the company submits its rate request to the North Carolina Department of Insurance (DOI) for independent review. Any premium changes to Blue Advantage and Blue Options HSA products must be approved by the DOI. 

Following DOI approval, Blue Advantage and Blue Options HSA customers will receive a letter from BCBSNC in October telling them what their specific rate increases will be for 2011. Customers may choose to make changes to their deductible, co-pay or co-insurance to reduce their premium. Customers may also choose to enroll in a new lower-premium product with streamlined benefits that BCBSNC will introduce in November.

Impact of Health Care Reform on Rates
Some provisions in the new law have an impact on 2011 Blue Advantage and Blue Options HSA rates.   These changes provide more benefits, but come at a greater cost. These changes include unlimited lifetime maximums, enhanced preventive care coverage, and no dollar limits for certain types of care such as mental health and prescription drugs.

An additional factor affecting rate increases for some members starting in 2011 is a provision in the health care reform law that requires insurers to rate dependents under age 26 as a single age group. Today, BCBSNC uses six distinct age groups to set premiums for these customers. This change means some customers under age 26 will see a smaller increase – or even a decrease – in their premium for 2011, while others will see a larger increase. 

BCBSNC currently prices its individual products taking into account the effects of underwriting, which reflects an individual’s health condition. The rating structure for policies sold or modified to lower benefits after March 23, 2010 will change in 2014, when health care reform eliminates underwriting. This effectively shortens the expected length of those policies, and as a result, the requested premium increases are lower.

Given what is known today about the health care reform law, premiums will be generally higher for individual policies after 2014. Rates generally will be lower for less healthy consumers and higher for healthier consumers than they would have been without reform. Federal subsidies will be available for eligible consumers.
About Blue Cross and Blue Shield of North Carolina:
Blue Cross and Blue Shield of North Carolina is a leader in delivering innovative health care products, services and information to more than 3.7 million members, including approximately 900,000 served on behalf of other Blue Plans. For 77 years, the company has served its customers by offering health insurance at a competitive price and has served the people of North Carolina through support of community organizations, programs and events that promote good health. Blue Cross and Blue Shield of North Carolina is an independent licensee of the Blue Cross and Blue Shield Association. Access BCBSNC online at