The head of the federal insurance marketplace and the former head of Connecticut’s marketplace is letting insurance commissioners know there’s a lot of data that shows rates should stay low in 2016.
In a July letter to Connecticut Insurance Commissioner Katharine Wade, Kevin Counihan, who is now head of the federal health insurance marketplace, said recent claims data show evidence of healthier consumers.
“Data show that consumers who signed up more recently are healthier than enrollees who were among the first to sign up during the first Open Enrollment Period,” Counihan said. “In addition, risk pools are expected to continue to get healthier. Many issuers are assuming consumers who enroll in Marketplaces during the remainder of 2015 and into 2016 will exhibit even lower rates of utilization than 2014 enrollees. Already, many issuers are reporting a decline in pent-up demand for services.”
In addition to being healthier, the penalty for not obtaining insurance in 2016 goes up. Counihan, who helped establish the Massachusetts exchange before the Affordable Care Act became law, said that the penalty should motivate a new segment of uninsured “who may not have a high need for health care to enroll for coverage.”
Also, overall medical costs remained moderate through the end of 2014 and 2015, according to Counihan. In his letter, he pointed out that Anthem, one of Connecticut’s largest insurers, announced on July 10 that it was proactively lowering its rates from its preliminary filings because claims through May 2015 showed that their members’ health care costs were lower than expected.
While Anthem did lower its average rate increase for plans on and off the exchange, all four of insurance companies on Connecticut’s exchange asked for an increase. Those increases are currently being reviewed by the Insurance Department.
Anthem requested an average 4.7 percent rate increase for its 34,553 policyholders on and off the exchange. HealthyCT, one of the four companies offering a plan on the exchange, requested an average 13.96 percent rate increase for its 5,699 policyholders. UnitedHealthcare Insurance requested 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. The rates for some of those plans are much higher than the average with some as high as 25 percent, depending upon the plan.
In their rate requests, the insurance companies explained they needed to increase their rates because medical and pharmaceutical costs are rising.
A report by pharmaceutical benefits manager Express Scripts indicated that people who enrolled in exchange plans have higher prescription-drug costs.
“Their significant use of specialty medications continues to drive up plan and individual costs,” the report found.
Some of the insurers on Connecticut’s exchange cited the cost of Hepatitis C drugs and new injectable cholesterol drugs as driving factors.
UnitedHealthcare, which is new to Connecticut’s exchange, explained that it needs more premiums to cover costs if deductibles and co-pays remain the same. It has the fewest number of customers.
It also pointed out there’s still a cost-shift happening where private plans have to make up for the lower reimbursement rates from Medicare and Medicaid.
Anthem told regulators it’s requesting an increase because the underlying claim costs are expected to increase year over year because of inflation, advancing medical technology and techniques, and increased utilization and cost-shifting.
Regulators aren’t allowed to take affordability into consideration when they set Connecticut’s rates, and Access Health CT, Connecticut’s exchange, isn’t able to negotiate to lower the rates before the Insurance Department reviews the requests. The legislature has debated, but never passed, legislation that would allow Access Health CT to negotiate.
“The rates have to be adequate, and they can’t be excessive or unfairly discriminatory,” Healthcare Advocate Victoria Veltri has said.
She said she wishes affordability was a factor, but it is not.
Last month, the Insurance Department — although it was not mandated to do so — held a public hearing on three of the proposed plans.
The Connecticut Insurance Department is expected to reach it decision on the rate increases for 2016 at the end of the month.