After easily clearing the legislature in the last week of session, a bill requiring a public hearing before the Insurance Department allows an insurer to implement a large rate increase is on its way to the governor’s desk.

Currently it’s up to the Department of Insurance Commissioner to decide whether an insurance rate increase request gets a public hearing. But under the measure, which cleared the House on the last day of the legislative session, any request to raise rates above 10 percent will necessitate a hearing.

In its final form the bill had broad support in the legislature. The Senate passed the bill unanimously, while the House approved it on the last day of the session 131-14.

The measure also requires insurance companies to notify customers of how the rate changes would affect them and of their option to provide testimony at a public hearing.

State Comptroller and former State Health Care Advocate Kevin Lembo issued a statement lauding the measure’s passage on June 8.

“Recent history proves that public input is critical in the health insurance rate review process,” he said. “Consumers deserve a voice and level playing when the Department of Insurance reviews rate increases that will significantly impact their lives. This measure…  recognizes the critical balance between protecting the interests of both businesses and consumers.

The recent history Lembo referred to may well have been two rate increases requested by Anthem Blue Cross Blue shield last year. The first rate hike, 47 percent on premiums, was granted by then-Insurance Commissioner Thomas Sullivan with no public hearing. Controversy erupted over that decision and Sullivan ultimately resigned as a result.

The next time Anthem requested a rate increase, 20 percent in November, then acting Insurance Commissioner Barbara Spear ordered a hearing and the public turned out.

Protesters delayed the hearing for almost 20 minutes
when Anthem representatives got a chance to justify the rate hikes. While Anthem’s Robert Ruiz-Moss spoke, about a dozen people stood and unfolded signs which collectively spelled, “Anthem Profits $4,750,000.” Other signage included the word “SHAME” and the phrase—CT Rates increased 96% 2000-2009.”

The signs brought the hearing, which already was running behind schedule, to a halt when hearing officer Mark Franklin insisted that the protesters leave and they remained standing silently.

Ultimately Spear denied the request in a decision that was praised by Lembo and then-Attorney General and current U.S. Sen. Richard Blumenthal who called it “a resounding win for working families.”

Following the decision Connecticut Medical Society Executive Vice President Matthew Katz said the rejection of the increase went “to show that public testimony in a transparent process works.”

But not everyone thought that mandating a public hearing for such requests was necessarily a good thing. During a debate over the measure in the Appropriations Committee in May, Rep. Linda Schofield, D-Simsbury, said the public will always oppose rate hikes.

Insurance rates are arrived at through a complex actuarial formula, she said. It falls to the Insurance Department to balance two sometimes conflicting principles, she said. On one hand the department must serve as an advocate for consumers, but on the other they must ensure the industry remains solvent, she said.

If rates are kept artificially low to appease consumers, insurance companies could end up filing for bankruptcy and become unable to honor claims, Schofield said. That option does not do consumers any favors either, she said.

“You can’t force a company to sell something for a cheaper price than what it costs them to put that product together,” she said.

Public hearings may open insurance companies up to a “public thrashing” but that does not change the math that allows them to remain in business, she said.

A similar measure failed to get out of committee last year. A spokesperson for Gov. Dannel P. Malloy said Friday he had yet to see the bill.

Editor’s note: An earlier version of this story mistakenly said Gov. M. Jodi Rell vetoed the bill when the bill never made it out of committee.