Insurance Commissioner Andrew Mais
Insurance Commissioner Andrew Mais, center, speaks at the Legislative Office Building in Hartford during the Insurance Department’s public hearing on rate hikes requested by six health insurance carriers for next year. Credit: Hugh McQuaid / CTNewsJunkie

Health insurance rate hikes approved last week by Connecticut regulators held insurance companies to suppressed profit margins that may prove unsustainable in the long run, the state insurance commissioner told reporters Tuesday. 

The Connecticut Insurance Department held a first of its kind virtual press briefing to clarify its approved 2023 rates for individual and small group plans sold both on and off the state’s health exchange. 

The approved rates were significantly less than the rates requested by insurers but in many cases still amounted to double-digit price hikes. They were met with statements of outrage and concern by advocates, public officials and politicians when they were released on Friday.

However, during Tuesday’s briefing, Insurance Commissioner Andrew Mais said his agency limited health insurance carriers to a .5% profit margin. Department officials said profit margins normally range between 2 and 3%.

“Now I’m sure anybody who is in business will understand that [.5%] is almost no profit and that may not be tenable in the long run, but again, this is a time for shared sacrifices and at the department, what we wanted to do is make sure we all sacrificed including the insurance companies,” Mais said.

Among the department’s considerations when approving health insurance rates are ensuring that the carriers stay solvent and are able to pay claims when they come due, Mais said. During the press conference, Deputy Commissioner Paul Lombardo also worried about the sustainability of Connecticut’s shrinking small group market. 

“The remaining small group members that are in the fully-insured market that we have regulatory authority over continue to deteriorate as the small group market shrinks,” Lombardo said. 

The regulators said the approved increases — an average of 12.9% for individual plans — were largely driven by the rising costs of health care and prescription drugs coupled with increased utilization of services in the aftermath of the pandemic. Those will be among the topics discussed at a planned Oct. 3 informational hearing on health care costs, which is expected to include stakeholders from the insurance industry and representatives of care providers.

However, on Tuesday, Tom Swan, executive director of the Connecticut Citizen Action Group, described Connecticut’s health care landscape as unaffordable for patients and compared trying to assign blame between providers and insurers to a Three Stooges skit. 

“They keep pointing to each other and whose fault it is [but] insurance companies are at the center of the biggest scam there is,” Swan said. “They become more and more vertically integrated whether it’s CVS / Aetna or UnitedHealthcare where they’re getting money at each of these levels. The bottom line is they’ve got to be reigned in.”

Swan suggested state insurance regulators could improve the process by banning the use of premium dollars to pay for stock buybacks that enrich insiders, limit executive compensation, or force the disclosure of more internal “self-dealing” by insurers.

Insurance Department officials stressed the reductions made to the insurer rate requests during Tuesday’s briefing. Regulators reduced individual plan increases by 37% and increases of small group plan rates by 47% when compared to the requests made by carriers in July. All told, those reductions would amount to roughly $138 million, they said.

Meanwhile, officials expect the extension of increased federal subsidies for on-exchange plans through 2025 will help offset the cost of the remaining increases and reduce the likelihood of many people leaving the market. Lombardo, the deputy insurance commissioner, said the extended benefits reduce the expected price hike to around 5% in some cases.

“In some instances, depending upon where they are and what plan they choose, they could mitigate the increase altogether,” Lombardo said. “So we do not anticipate a significant number of individuals leaving the insured market.”

At a state Capitol press conference later Tuesday, Gov. Ned Lamont praised the work of the Insurance Department, which he credited with “dramatically” reducing the requests filed by insurers. 

“We’re just getting started because at the end of the day, you’ve got to deal with the underlying cost of health insurance and if you don’t deal with that, we’re going to have this back and forth and pass along the expenses for a long time to come,” Lamont said. 

Despite the “sticker shock” of double digit rate increases, the governor said the impact of the price hikes would be blunted for exchange customers by the ongoing federal subsidies. 

During the press conference, Lamont reiterated his reluctance to adopt a public health care option, which other members of his party have sought to establish as an option administered through the state comptroller’s office.

“I did not want the taxpayers taking the financial risk if all the sudden we found that health care costs went through the roof and the insurance programs weren’t actuarially sound,” Lamont said. “We’ve run into that with pensions and other things so far.”