HARTFORD, CT — There’s no reason for Insurance Department regulators to consider affordability when it sets health insurance rates for 2020, but consumers were back Wednesday calling for them to consider it.
“What we’re not taking into account here is that this is like compound interest,” Rep. Tom Delnicki, R-South Windsor, said.
Every year the two health insurers offering plans on Connecticut’s health insurance exchange ask state regulators to increase the monthly premiums they use to pay medical providers and support their operations. Typically, insurance regulators knock down the requests.
This year, Anthem Health Plans, Inc. has asked for a 15.2% increase in individual health plans, mostly because of a 9.3% increase in medical cost trends and the reinstatement of the federally mandated health insurer tax. Anthem served approximately 21,900 members in Connecticut last year.
ConnectiCare Benefits, Inc., which serves about 75,600 consumers, proposed an average 4.9% increase in its rates. It also attributed the increase to a 9.3% increase in medical cost trends.
Delnicki called the rate increases “unconscionable” and “unsustainable.”
Sen. Saud Anwar, D-South Windsor, who is a doctor currently serving as the chair of Internal Medicine at Manchester Memorial and Rockville General Hospitals, said they are going to continue to have the same discussion every year if they don’t change some models of delivery.
He said Connecticut insurance companies are still behind what insurance companies in other states are doing to partner with medical providers to reduce the cost of care.
He said right now there’s no motivation to cut costs. He said the insurance companies just keep asking for increases and put no pressure on providers to improve the delivery of care. He said the number of those so-called “risk contracts” between doctors and insurance companies are minuscule in comparison to the number of contracts in other states, like Massachusetts and California.
Rosana Ferraro, policy and program officer at the Universal Healthcare Foundation, said the rate requests were not as high this year as they have been in the past, but there’s a cumulative effect.
She said consumers are not only on the hook for their premiums, but they also face rising out-of-pocket costs and “sky-high deductibles.”
The foundation shared the results of an independent poll released in October 2018 that found that 50% of Connecticut adults experienced a problem with health care affordability in the past year.
The Health Disparities Institute (HDI) at UConn Health found that nearly 86,000 medical-debt lawsuits against Connecticut patients with overdue medical bills were filed in small-claims court between 2011 and late 2016.
And while costs are rising, there also are things happening in the health insurance marketplace that insurance companies can’t control.
“The uncertainty faced in 2020 is driven in large part by the absence of the individual mandate penalty and the potential shift of members due to changes in federal guidance in the individual market,” said Steven Ribeiro, Anthem’s regional vice president of sales.
The reinstatement of the Health Insurer Tax by the federal government is responsible for 2.78% of Anthem’s proposed increase and 3.7% of ConnectiCare’s increase.
Both companies are also predicting the individual market will shrink, which will increase the risk.
Eric Galvin, CEO of ConnectiCare, said the individual market saw a loss of 23,000 members in 2018.
In a phone interview Tuesday, Galvin said it comes down to those who aren’t subsidy eligible. He said those members are bearing the full cost of premiums and they tend to be healthier and in some cases younger.
These consumers are dropping out of the market, partially because of the elimination of the individual mandate, according to Galvin.
Others are dropping out because they don’t receive a subsidy to lower the monthly premiums. Individuals and families with incomes below 400% of the federal poverty level receive some level of subsidy.
At least 38% of ConnectiCare’s individual policyholders are ineligible for federal subsidies.
“For many individuals and families, the individual market is the only option for accessing comprehensive health insurance coverage,” Robert Kosior, chief operating officer of ConnectiCare, said Wednesday.
Kosior added: “We agree that affordability continues to be an issue.”
Insurance Commissioner Andrew Mais asked insurance executives what policies lawmakers should consider in order to make healthcare more affordable.
Ribeiro said a solution must involve doctors, insurance companies, and consumers.
“We need to be in the room together to find a solution,” Riberio said. “Individual silos don’t work.”
Neil Kelsey, chief actuary for ConnectiCare, agreed that it has to be a “holistic approach.”
Kelsey and officials from ConnectiCare said that the most significant driver of the required premium increase is the increased cost of reimbursing health care providers for the services they provide to our members.
“ConnectiCare does not provide health care to our members — we pay hospitals, doctors, pharmacies, and others to provide that care,” Kelsey said.
Kelsey also suggested more flexibility in plan designs could help lower costs for consumers.
When asked about administrative costs, Ribeiro said that they only account for 15% of premiums. He said approximately 85% of insurance premiums go to claims.
Kosior said increases in the administrative costs historically have been lower than increases in the “provider unit cost.” That being said, “We have been much more aggressive as of late in managing our administrative costs,” he added.