Even without a public hearing the Insurance Department turned down Anthem Blue Cross and Blue Shield’s request to raise health insurance premiums 12.9 percent for more than 25,000 individual policies.
Instead it granted the company a 3.9 percent increase.
“We are currently reviewing the disposition from the Connecticut Insurance Department,” Sarah Yeager, director of Anthem communications, said. “We share our members concerns over the rising cost of health care. The increasing demand for medical services, including the use of new, expensive prescription drugs, and demand for advanced technologies are driving up the cost of health care at an unprecedented rate.”
The state’s largest health insurer said it needed the 12.9 percent increase to account for rising claims, new technologies, and government mandated benefit changes.
“The 3.9 percent approved rate increase is reasonable in relationship to the benefits being offered, and is, neither excessive, inadequate or unfairly discriminatory,” Paul Lombardo, an actuary with the Insurance Department, concluded.
Lombardo wrote in his report that the lower figure was based on reducing the operating margin for the plans and removing the “underwriting wear-off” or risk Anthem assumed it would be taking on when it adds new members in October.
“The actual incurred medical loss ratios have been steadily increasing from 2007 to 2009, but dropped significantly from 83.31 percent in 2009 to 75.28 percent in 2010,” Lombardo wrote. “The experience of this block of business, along with the resulting medical loss ratios, indicate an experience adjustment is not necessary at this time in order to achieve the MLR rebate loss ratio of 80 percent defined in regulation by HHS [Health and Human Services].”
The medical loss ratio is the portion of customers premiums that actually goes to covering medical expenses.
The 3.9 percent increase will take effect on Jan. 1 for Anthem’s 25,000 policies.
Since the double-digit rate request made on Aug. 31 didn’t exceed 15 percent it didn’t trigger an automatic public hearing.
Last year, Anthem came under fire from health care advocates and consumers who balked at its request for a 19.9 percent increase. Last November, advocates disrupted the public hearing on the Anthem rate increase and lawmakers responded by passing legislation that required a public hearing for any rate increase above 10 percent.
Gov. Dannel P. Malloy vetoed the legislation calling it a costly mandate for the Insurance Department.
“The department regularly rejects requests that are not actuarially warranted,” he said in his veto message. “The current process fully protects from excessive and discriminatory rate increases.”
State Healthcare Advocate Vicki Veltri, who opposed Anthem’s 19.9 percent increase in 2010 which was eventually denied by then Acting Commissioner Barbara Spear, said last month that Anthem’s 12.9 percent increase was in line with what other insurance carriers have requested, but is still a few percentage points higher.
“Other carriers came in at 9.3, 9.74 and 9.95,” Veltri said.
But regardless of the percentage of the increase, Veltri pointed out all of the increases are significant for consumers still struggling in this economy.
And even though there was no public hearing, the Insurance Department did receive one comment on Anthem‘s 12.9 percent rate request.
A person not identified in Lombardo’s report opined that “If an existing member desires to purchase a lesser medical plan, the member should be allowed to make this ‘choice’ without satisfying new eligibility requirements.”