A handful of individuals told Insurance Department regulators Monday that the rate increases requested by three health insurance companies were excessive.
ConnectiCare Insurance Company was the first of three companies to have its request for a 9.6 percent rate increase for 34,000 policyholders heard during Monday’s public hearing. They were followed by Golden Rule Insurance Company, which is requesting an 18.5 percent rate increase for 2,000 policyholders, and then Anthem, which is requesting a 4.7 percent rate increase for its 34,553 policyholders on and off the exchange.
Healthcare Advocate Victoria Veltri and Insurance Commissioner Katharine Wade agreed to hold the hearing on three insurance rate increases, even though there was no requirement to do so under state statute.
There are several rate increase requests for plans on and off the exchange that won’t receive a public hearing. HealthyCT, one of the four companies offering a plan on the exchange, is requesting an average 13.96 percent rate increase for its 5,699 policyholders. UnitedHealthcare Insurance is requesting an average of 12.4 percent more from 969 policyholders. ConnectiCare Benefits, which is ConnectiCare’s on-exchange plan, is requesting an average 2 percent increase for its 39,850 policyholders. None of those three plans were chosen for a public hearing.
Lynne Ide, director of program and policy for the Universal Healthcare Foundation of Connecticut, said she doesn’t believe the rate hike hearing process is “truly open and accessible to the people who are going to be directly impacted.”
She urged regulators to work with stakeholders to implement a more inclusive process. She said it’s good the insurance companies are telling their policyholders about the public hearing, but “it’s not a substitute for meaningful engagement” of consumers.
“I urge you to put the policyholder first in your decision regarding ConnectiCare’s rate increase request. Something has got to give — and it shouldn’t always be hard working people’s wallets,” Ide said.
Ide made similar comments about Golden Rule and Anthem.
But regulators will only be able to take part of Ide’s comments into consideration as they set the rates for 2016.
John Aloysius Cogan Jr., an associate professor of law at the University of Connecticut, said that the rate review process is based on a statutory standard.
The Insurance Department’s job is to make sure that the premium covers the claims and doesn’t discriminate against any specific group of clients. Cogan said regardless of whether there’s a public hearing, the Insurance Department’s actuaries will review the rates for all the companies doing business in Connecticut.
“I’m not so sure what the public hearing adds to the rate review process,” Cogan said.
That’s because things like affordability are not something regulators are allowed to take into consideration. The rate review process is designed to make sure calculations used by the insurance companies adhere to those statutory standards.
Veltri said she wished affordability was one of the standards regulators are expected to apply to the rate requests, but Cogan is correct, it is not.
“We’re limited in what we can hold them to,” Veltri said. “The rates have to be adequate, and they can’t be excessive or unfairly discriminatory.”
Other states like Rhode Island take affordability into consideration, Veltri said.
Prior to the Affordable Care Act, insurance companies were able to unwrite plans based on the risk of consumers, but now they are required to accept anyone, including those with pre-existing medical conditions. Federal law also dictates how much money insurance companies will receive for the amount of risk that exists in their group.
During Monday’s public hearing, ConnectiCare noted that fewer federal dollars are available for the temporary reinsurance program, which will shift more of the claims costs to carriers. The federal reinsurance program coinsurance is 50 percent and the claims threshold for that contribution to kick in increases from $45,000 to $90,000 in 2016.
ConnectiCare told regulators said that the company needed to increase the rates because the reimbursement from the federal government under the ACA is being reduced, specialty drugs like new injectable cholesterol inhibitors are expected to cost $7,000 to $12,000 per year, and the cost of medical services is trending up at a rate of 8.98 percent. Anthem also pointed to specialty drugs and the reduction insurance reimbursement by the federal government as the reason for its increase.
Elizabeth Keenan, a member of CONECT, Congregations Organized for a New Connecticut, told regulators that the 8.98 percent cost increase trend seemed high when compared to the calculation from other insurers.
“ConnectiCare also does not seem to offer enough data in its application to justify this higher-than-average trend factor, as well as many of the other assumptions it uses to justify its rate increase,” Keenan said in her written testimony.
There were two favorable trends pointed out by ConnectiCare and other insurers. The first was an increase in claims from people who were unable to obtain services before the Affordable Care Act. ConnectiCare believed it was a “one-time” phenomenon unlikely to impact rates for 2016. Also, consumers purchasing insurance were generally younger than those doing so in 2014.