An Act Concerning Rate Approvals for Individual Health Insurance Policies awaits state Senate approval to create a more robust and transparent process for considering insurance company requests to raise premiums. If passed, the bill would finally treat consumer and business interests fairly—putting patients on par with insurance companies.
Historically, the overwhelming majority of health insurer rate filings are simply approved by the Insurance Department as requested. Until last year, rate increases for individual health insurance policies were routinely approved as filed—22 of the 26 insurer rate requests. And the few that were reduced by the Insurance Department still increased rates by more than 10 percent, according to a report by the Office of Legislative Research.
Last summer, under tremendous pressure from the public and our offices, the State Insurance Department held its first ever public hearing on an Anthem request for an outrageous rate increase. Even with our intervention—which was severely restricted by the Insurance Department—the Insurance Commissioner approved a whopping 13 to 20 percent increase for Anthem’s individual policyholders.
This case is symptomatic of the need for systemic overhaul of the state’s rate review process. Individuals and businesses must have power to influence and change the outcome – a voice in the process. The current de facto “file and use” system of insurance rate review is flawed and failed.
Specifically, Senate Bill 194:
1. Requires insurers to tell policyholders about their rate submission, as well as the time, date and place of a public hearing;
2. Requires the insurance commissioner to schedule a hearing and post the company’s filing on the department website as public record;
3. Allows the Healthcare Advocate and the Attorney General to appear as parties in any rate hearing to examine the insurer’s experts;
4. Requires the commissioner to consider and document all relevant material examined in rejecting or approving an increase, such as: the company’s financial statements; its rate forecasting methods; its relationship with parent companies or subsidiaries; and, its profit and risk exposure.
Some have argued that we don’t need rate hearings because the commissioner already has authority to call a hearing if he sees fit. This unbridled discretion can doom effective rate review. Except for last summer, under tremendous public pressure, the commissioner has never used his authority to require hearings. Reform is vital to achieve transparency and accountability.
The rate analysis must also consider the impact of rate increases on the continued existence of a particular product—and include projections of how many people will drop the product because of rate increases, and the affect on future premium requests.
The rate approval process is complex. For the first time, it would be bound to clearer requirements, and subject to public scrutiny—making the process fairer and stronger.
Senate Bill 194 simply requires that regulators really regulate—hold hearings, provide greater disclosure, and make rate decisions openly and accountably. A little sunlight may be shocking at first, but it will lead to a healthier marketplace.
Richard Blumenthal is Connecticut’s Attorney General and a candidate for the U.S. Senate. Kevin Lembo is the state’s Healthcare Advocate and a candidate for lieutenant governor.