Cheryl Scott, Group Health president and CEO, says the cooperative had no choice but to pull out once the other big two had withdrawn. Remaining in the market alone posed too great a risk to Group Health's financial stability. There have to be choices in the marketplace. The state insurance commissioner disputes the industry's loss claims and maintains that measures limiting individual access to insurance will not significantly alter the carriers' financial picture. Their return to reserves have been going up steadily.
Losses are a combination of claims paid and administrative costs.
Stenson says increases in losses are not the result of significantly higher claims, but soaring overhead. The commissioner and health care advocates claim the insurers have let administrative costs spiral out of sight. Stenson notes that Premera's administrative costs rose 209 percent between 1992 and 1997 and calls the growth typical of the industry. Washington's individual market problems are not unique, says Katherine Swartz, an associate professor with Harvard University's School of Public Health. The premiums are going up, and a lot of lower-income healthy people are not purchasing health insurance.