Courtesy of ConnectiCare

(Updated 1:38 p.m.) An insurance company that was told last week by regulators that its revised rates were too high is suing the state and threatening to leave Connecticut’s insurance exchange.

The ink had barely dried on the Insurance Department’s decision to deny a 27.1 percent rate increase for ConnectiCare Insurance Company’s on-exchange plans when it filed an injunction last week in New Britain Superior Court.

In court documents, ConnectiCare claims regulators misapplied the law when it refused to approve its revised rate request for its on-exchange plans.

The company originally requested a 14.3 percent rate hike, but on Aug. 23 revised it to 27.1 percent. At the end of last week, regulators approved a range of rate increases from 15.4 and 24.8 percent, with an average of 17.4 percent. The company’s on-exchange plans cover 47,597 people.

Regulators also denied ConnectiCare’s 42.7 percent proposed rate increase for its off-exchange plans that cover 37,142 individuals. The company has until later today to resubmit its calculations for its off-exchange plans.

The complaint filed in New Britain Superior Court last week focuses solely on the rejection of its revised rate request for its on-exchange plans. It makes no mention of the denial of its off-exchange rates.

The reason it’s seeking a temporary injunction is because it has until Friday, Sept. 9, to decide whether to participate in Connecticut’s insurance exchange, also known as Access Health CT, in 2017.

“ConnectiCare wants to remain a carrier on the Exchange,” according to the complaint. “But ConnectiCare cannot continue in that effort without seriously considering the losses that would incur in the future under the inadequate rates approved by the commissioner today. As a result, ConnectiCare must be and is prepared to exit the Exchange if the Commissioner does not grant ConnectiCare adequate rate on the basis of all the evidence in the record and not only some of the evidence submitted.”

If ConnectiCare exits the exchange, Anthem, another company that had its rates hike requests for both its on and off-exchange plans denied by the Insurance Department, would be the lone carrier left.

Access Health CT CEO James Wadleigh said that Connecticut’s exchange would continue even if Anthem was the only carrier left.

“While it’s true that competition benefits the consumer, in this case there could potentially be a silver lining for the residents of Connecticut,” Wadleigh said Wednesday. “Anthem could create a more diversified risk pool which could help them control and help stabilize the cost of the various policies it offers to customers throughout the state.” 

ConnectiCare argues in court documents that there was substantial evidence in its rate request to show regulators that its application for an average price hike for its on-exchange plans was “adequate” and “not excessive.”

The complaint says that its experience paid through July 31, 2016, which established higher-than-expected claims paid in the first six months of 2016, shows little evidence of decreasing. It also says because HealthyCT and UnitedHealthcare will no longer be participating in the exchange it will drive its claims higher because it will increase its risk pool. It predicts that healthy individuals will leave the market to avoid significant rate increases.

“We have been doing everything we can to continue to offer quality health plans to our members on the exchange, but we do not have the resources to do so at premium rates that could jeopardize our financial stability,” Michael Wise, president and CEO of ConnectiCare, said in a statement Tuesday. “As we have been discussing intensively with our regulators at the Connecticut Insurance Department for many months, the cost of the health care being accessed by our members greatly exceeds the premiums we have collected.”

Wise said once it became apparent that claims were outpacing premiums, it updated its rate filing to reflect the latest information.

“We are disappointed that the Department has refused to consider all of this information,” Wise said. “By not acting, it is putting our company at risk and creating uncertainty for Connecticut residents. We are taking this legal step to do everything in our power to require the Department to approve actuarially sound and stable rates so that we can continue to be the plan on which so many of our citizens depend.”

A spokesman for the Insurance Department acknowledged the lawsuit.

“The Department will not comment on pending litigation, other than to say it stands by the process by which the ConnectiCare rate application was reviewed and the decision that was reached.”

ConnectiCare is seeking a temporary injunction vacating Insurance Commissioner Katharine Wade’s decision. It also seeks to require regulators to take its Aug. 23 filing into consideration.