The White House report released Wednesday morning showed that Connecticut, which is operating its own health insurance marketplace, will have the 4th highest premiums in the country when enrollment begins on Oct. 1.
The report was meant to highlight how competition between insurance carriers has lowered costs for consumers. The idea behind the law was to get insurance carriers to compete by offering various tiers of insurance through an online marketplace where they could compare the plans side-by-side and no one could be denied.
But for the middle-income consumers purchasing their plans on the exchange, the expectation is that price will be a major factor in their decisions. There will be three tiers of coverage (bronze, silver, and gold) offered in Connecticut by three insurance carriers.
“States with the lowest premiums have more than twice the number of insurance companies offering plans than states with the highest premiums,” the White House report found. “In the 48 states (including the District of Columbia) where premiums are available, the average premium for the lowest cost silver plan in the marketplace is more than 16 percent lower than projected.”
The report also found that when states established their own exchanges the rates were lower than the 36 states allowing the federal government to manage their exchange. But that’s not true of Connecticut.
Before the federal subsidies are applied only Wyoming, Alaska, and Mississippi will have higher monthly premiums than those offered here in Connecticut.
So why are Connecticut’s rates 28- to 37-percent higher than the rest of the country?
Access Health CEO Kevin Counihan said his team has been unable to “verify the figures, which indicated that Connecticut premiums rank as the 4th highest in the country.”
He said it might have something to do with the fact that Connecticut “currently has the 4th highest medical costs in the U.S.”
But Ellen Andrews, executive director of the Connecticut Health Policy Project, thinks the higher cost stems from the state’s decision not to negotiate with insurance carriers over rates. She said if Counihan’s logic is correct then states like New Jersey and New York, which have higher medical costs and higher costs of living, would be seeing higher monthly premiums, but that’s not what’s happening.
“It really comes back to negotiating premiums,” Andrews said.
The Access Health Board of Directors made a decision last November that it wouldn’t negotiate with insurance carriers that wanted to offer their plans on the exchange.
At the time, staff argued that it’s unknown what population of people will participate in the exchange when it opens in January 2014. But not everyone agreed with the premise. The state Senate passed legislation asking the board of directors, co-chaired by Lt. Gov. Nancy Wyman and Office of Policy and Management Secretary Ben Barnes, to negotiate, but the bill was not raised in the House before the end of the legislative session this summer.
But instead of negotiating, the state Insurance Department as it does with all insurance products, reviewed the rates and how they were calculated. In some cases, the Insurance Department successfully pushed insurance carriers to lower their rates on the exchange.
Counihan speculated that another reason the rates may be higher in Connecticut is because of the “substantial number of benefits when compared to other states, as well as broad provider network requirements, both of which tend to drive higher premiums.”
Andrews argues that under the Affordable Care Act all states and the federal government, which will run the exchanges in 36 states, were asked to adopt a set of essential benefits. Those benefit levels — in other words, which services are to be covered — were raised in most cases, she said.
As far as competition is concerned, many states have more insurance carriers participating in their exchanges.
There are at least 17 insurance carriers participating in New York’s health exchange, while there are 11 carriers participating in Florida’s. However, both New York and Florida are far larger in population than Connecticut, which has 3.5 million people.