Insurance ‘study’ prompts state action

The Washington Insurance Commissioner’s Office will take enforcement action against an online insurance broker that published a study identifying Spokane as the most expensive health insurance market in the United States.

But whatever penalties are imposed on eHealthInsurance, or whatever corrections might be forthcoming, they are unlikely to completely heal the wound inflicted by the survey, which was summarized in a “Hot List” published last Sunday in Parade magazine. Parade is inserted into more than 32 million newspapers nationwide, including The Spokesman-Review.

A lot of readers must have choked on their corn flakes.

According to the company’s Web site, www.ehealth insurance.com, insuring a family of four in Spokane costs $962 per month. That’s six times the premium charged in Grand Rapids, Mich., the least expensive market. It’s also more than 50 percent higher than Seattle, which should have alerted someone to the possibility the survey was in error.

It certainly did Deputy Insurance Commissioner Beth Berendt. Most insurance plans sold in Washington are offered statewide, with no variation in premiums. What could account for such a huge discrepancy between Seattle and Spokane, let alone Spokane and just about Anywhere Else, USA?

Turns out eHealthInsurance “surveyed” one plan, a Group Health offering that did not even match the selection criterion for deductible, which was supposed to be $2,000. The Group Health plan carried a $1,500 deductible. The higher the deductible, the lower the premium.

But that was a minor glitch in a report Berendt says is rife with errors — errors she brought to the company’s attention before it was published. Fundamentally, she says, the survey is not a survey, but advertising. Health insurance plans offered in Washington by KPS, Premera Blue Cross and Premera subsidiary LifeWise were not included in the eHealthInsurance survey because the company was not authorized in March, when the survey was made, to broker those plans.

In other words, eHealthInsurance, which bills itself as “the leading online source of health insurance for individuals and small business,” sampled only the products it received a commission to sell. It’s as if Nordstrom looked at all its merchandise, identified its least expensive blouse, then released a “study” saying that blouse was the cheapest in town.

Yet a visit to ehealthinsurance.com last week turned up 40 plans for a family of four in Spokane with premiums ranging from $198 to $1,422, depending on copayments and deductible.

And, acknowledges eHealthInsurance spokeswoman Emily Fox, it may be the company had already begun to post many of these plans and the premiums before the survey was published July 19th.

The company has been working with the Insurance Commissioner’s Office on a statement clarifying that point. As of Thursday, the clarification included this sentence; “Other insurance options were and continue to be available in the Spokane area that were not available on the ehealthinsurance.com Web site when the survey was done, and these more cost effective plans were not included in the study.”

Oh, really.

Berendt says talks with eHealthInsurance continue. But the statement alone, she adds, will not resolve all the issues Washington has with the company.

“The Insurance Office is very disturbed that this information was distributed and was inaccurate and incomplete,” she says. “It’s unethical and it’s wrong.”

It is also a violation of Washington insurance regulations regarding advertising, Berendt says. “I can assure you we are going to be taking enforcement action.”

But what about Spokane’s black eye? Millions of Americans now believe we pay outrageous health insurance premiums. The Insurance Office says they have already gotten calls from people who are having second thoughts about moving to the area after reading Parade.

Worse still will be the revulsion among business owners considering relocation or expansion in Spokane. Area recruiters can correct the misimpressions caused by eHealthInsurance if relocation candidates ask about the survey, but they will not be able to reach those who never inquire about why our premiums are more than twice those paid by residents of only a handful of the 99 other largest cities in the U.S.

eHealthInsurance itself says its report was created to “be used as a reference when making relocation decisions.”

Reference? Not something this eRroneous.