Two Rate Increases, One Decrease Proposed for Exchange Plans

(Updated 6:25 p.m.) Two of the three health insurance companies participating in the exchange submitted proposals to increase rates next year by more than 11 percent, while the third proposed decreasing rates 8.9 percent.

A fourth company, UnitedHealthcare, submitted a proposal to participate in the marketplace for the first time next year.

Anthem Health Plans proposed an average 12.5 percent increase that could impact more than 66,000 policies. But that increase won’t apply to every policyholder. Those under the age of 30 on a catastrophic plan will see a decrease and others could see an increase of as much as 17.38 percent.

The company, according to its filing with the Insurance Department, “anticipates a ‘pent-up’ demand for health services in 2015, the second full year of the Affordable Care Act, and higher morbidity — the influx of previously uninsured into insured risk pools.” The company cited a Centers for Disease Control study on the health status of insurance and uninsured populations as the basis for its conclusion.

It also “noted that other factors affecting rates are taxes and fees, changes in benefit design, particularly on the pharmacy side.” One specific cost impact is coverage for a pricey new drug called Sovaldi, which is used to treat Hepatitis C.

ConnectiCare Benefits proposed an 11.8 percent increase in rates for its 27,500 policyholders. It cited greater demand for medical services and a $14.68 per member monthly fee associated with the federal health care reform law.

It should be noted that the rate increases for each of the Anthem Health and ConnectiCare Benefits plans vary depending on plan type, age, and county. However, the averages were 12.5 and 11.8 percent. None of these proposals will impact the amount of the federal subsidy individuals participating in exchange plans will receive to off-set the cost of the monthly premiums.

According to Access Health CT CEO Kevin Counihan, consumers whose health insurance plans are subsidized by the government will not pay the full price of any increase state regulators may approve. For example, Counihan said, if the federal government is subsidizing a given family’s health insurance at a rate of 60 percent of the cost per month, then the federal government is going to cover 60 percent of any rate increase as well.

HealthyCT, the new Consumer Operated and Oriented Plan with fewer than 8,000 policyholders thus far, proposed an 8.9 percent decrease in their rates. Last year was the company’s first, so it had no claims experience upon which to base its rates. While claims experience is still lacking for all three of the carriers, HealthyCT was able to remove the projected greater utilization of medical services and extra claims costs from the 2015 rates.

“HealthyCT is also choosing to spread out administrative expenses and fees over a three-year period instead of one policy year,” it told insurance regulators. “The result is a lower expense and fee charge per member per month.”

Insurance regulators have until the end of July to inspect the rates and propose adjustments. The public has until June 23 to submit their public comment on the proposals.

Last August, they accepted the rates submitted by ConnectiCare, and lowered the rates proposed by Anthem. HealthyCT voluntarily lowered its rates after a review determined their policyholders would be healthier than initially anticipated.

Earlier this year lawmakers decided not to move forward with legislation that would force Connecticut’s health insurance exchange to negotiate with the private insurance companies participating in the marketplace.

“The increases are unfortunate, but not surprising,” Ellen Andrews, executive director of the CT Health Policy Project, said Tuesday. “It will hurt CT families and we can’t afford it.”

Andrews advocated for the legislation that would have required Access Health CT to negotiate with insurance companies who want to participate in the exchange, but that legislation failed to make it out of the Senate.

According to Andrews, since Access Health CT’s future stability as a quasi-public agency relies upon receiving a small percentage of the premiums charged by the carriers, it lacks the motivation to lower rates for consumers.

“Setting up incentives that allow Access Health CT to benefit from their own decision not to negotiate rates with insurers was foolish,” she said. “If independent consumer advocates had been at the table, that wouldn’t have happened.”

Rep. Rob Sampson, R-Wolcott, disagrees.

He said he doesn’t believe what Andrews describes as “active purchasing” would have yielded a better result.

“There are still 77 percent of the people in the exchange receiving an average subsidy of more than $5,000,” Sampson said Tuesday. “The whole point of the exchange was to offer a plethora of insurance plans so consumers could find one that fits them perfectly — that’s not what this is.”

He said the prices offered during the first year were probably “artificially low” so it’s understandable insurance companies, based on medical costs, would need to increase them.