For the first time since taking office, Gov. Dannel P. Malloy used his veto power Friday, squashing three bills including one that would have required a public hearing before an health insurer implemented a large rate increase.
It is up to the Department of Insurance Commissioner to decide whether an insurance rate increase request gets a public hearing. But the measure would have required a hearing for any request to raise rates above 10 percent.
That would be a costly and unnecessary requirement, Malloy said in his explanation of his decision. The Insurance Department already conducts an actuarial analysis of each request, he said.
“The department regularly rejects requests that are not actuarially warranted,” he said. “The current process fully protects from excessive and discriminatory rate increases.”
But proponents of the bill question that assertion. Jennifer Jaff, executive director of Advocacy for Patients with Chronic Illness Inc., said Tuesday she disagrees.
“I know of only two instances in the past five years or so when a health insurance rate was rejected, and both times, it was due to the involvement of the attorney general and healthcare advocate,” she said. “I do not believe that we can get a grip on escalating health insurance premiums in Connecticut without public hearings.”
However, Malloy said that mandating the Insurance Department hold up to 15 symposiums a year would add an estimated $181,800, to the already-stressed current budget. But that number, generated by the Office of Fiscal Analysis, may actually be low because it did not include potential costs to the attorney general’s office and the health care advocate, he said.
Those costs would be charged to the state insurance fund, which would in turn be passed on to the consumer, he said.
He said the measure would conflict also with the federal health care reform passed last year, which he supports and believes should be given every opportunity to succeed.
After the passage of the Patient Protection and Affordable Care Act, “the U.S. Department of Health and Human Services (HHS) has developed regulations outlining its definition of an effective rate review process under the PPACA,” he said. “Connecticut’s current system meets and exceeds those standards.”
Connecticut State Medical Society Executive Vice President Matthew C. Katz said the federal health care reform alone is not enough to truly protect consumers.
“In pointing to the Patient Protection and Affordable Care Act in his veto message, the governor failed to note that without strong state legislation like SB 11, a health insurer could request rate hikes of 9 percent each year, year after year, and federal law would never trigger a hearing as long as the increases remain under the 10 percent threshold. The voice of the public has no role under PPACA,” he said in a statement.
Under the vetoed bill, the attorney general and the health care advocate would have been able to trigger a public hearing by requesting one.
Katz recalled a public hearing on a 20 percent rate hike request from Anthem last year.
At that hearing protesters delayed proceedings 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.
That request was ultimately denied by then acting Insurance Commissioner Barbara Spear and Katz credited the hearing process for the refusal.
“Without the questions raised in the public hearing, CSMS is concerned that the outrageous premium request would likely have been approved,” he said.
But Malloy said that neither he nor HHS believe mandating hearings will do anything to improve the rate review process.
Instead, HHS calls for state’s to develop a mechanism for consumers to review and comment on rate filings. In Connecticut that has been accomplished by an addition to the Insurance Department’s website, where consumers can review documents and correspondences between the department and insurers. They can also submit comments to the department.
“This is a far better and more cost-effective system to facilitate transparency in the rate review process than mandatory public symposiums,” Malloy wrote.
Katz and Jaff both thought otherwise.
“A web site is not the answer to or for transparency. Listing opinions and decisions is not the same as providing all of the necessary information for public review within the deadline for public review and public voice. Filling out an online form is not the same as speaking to a hearing officer,” Katz said.
“It seems to me that the $1 million grant the State received from HHS to beef up its rate review process should have resulted in more than just having rate filings posted on the Insurance Department’s website, which is all that has been done,” said Jaff.
But Malloy said that, faced with the “increased burden and uncertainty caused by the portions of SB 11 that go beyond federal standards,” insurers will likely just choose to offer less products to Connecticut consumers.
And less competition in the state’s insurance market translates to an increase in the cost of health insurance, he said. On those grounds Malloy concluded the bill was “bad for the people of Connecticut.”