Access Health CT is raising its charge next year for policies sold on the state’s health insurance exchange, the first increase in eight years.
The exchange’s Board of Directors approved the 0.2-percentage point increase Thursday over objections from business and lawmakers, siding with staff who said they’d cut expenses as much as they could.
The unanimously approved increased assessment will impact premiums starting in 2024. Access Health said it will generate roughly $1.8 million in revenue for the new budget.
“I believe we are at the point where this is the right action for the exchange,” board Chairman Charles H. Kippel said.
The board’s vote increases Access Health’s assessment to a rate of 1.85%, which Access Health staff said would cost $1.44 per month for each consumer who purchases insurance through the exchange.
Access Health CEO James Michel said the increase is needed even though the $54.1-million budget includes a cut of $734,326 for the upcoming fiscal year.
“We continue to work everyday to find — to make ourselves, sort of, more efficient, to minimize cost on the industry,” Michel said.
His comments came after several lawmakers and business groups urged the board to reject the increase.
During a discussion that lasted more than an hour, Rep. Kerry Wood, D-Rocky Hill, who co-chairs the legislature’s Insurance and Real Estate Committee, said the increased assessments will hurt the “already extremely sensitive” market for small businesses who rely on the exchange to provide health insurance coverage to their employers.
“I just think that raising the assessments is counterintuitive to the goals we’re trying to do with strengthening the exchange,” she said.
Wood estimated the assessment, based on Access Health’s expectations, would mean a $70 annual increase in health insurance premiums for a family of four.
She highlighted efforts by the legislature to lower the cost of policies on the exchange, including lowering the premium tax.
Wood provided a letter, signed by several members of her committee, against the increase, and members Rep. Steven R. Meskers, D-Greenwich, and Sen. Tony Hwang, R-Fairfield, a ranking member, also voiced their opposition during the meeting.
The Connecticut Business and Industry Association and National Federation of Independent Businesses also registered their opposition.
“Connecticut small employers struggle every year to keep up with rising healthcare costs,” CBIA Assistant Council Wyatt Bosworth said, describing the fully insured market in Connecticut being “on life support.”
But Michel and Access Health’s board said they’ve done what they can to avoid raising costs, noting the assessment has been flat for eight years.
Those efforts included using $1.9 million from Access Health’s budget reserve to fund operating costs as part of the budget that ends June 30. The exchange also used $2.7 million from the reserve to fund efforts to notify people about changes in Medicaid benefits and help them find coverage.
Access Health Finance Committee Chairman Claudio Gaultieri said the board delayed an increase last year so it could review its options, including seeking grants and holding workshops to look at expenses.
“For me, the question now is: what comes after those alternatives?” Gaultieri asked.
He noted the shrinking exchange market has meant less revenue for Access Health at a time when the agency is dealing with increased costs.
Access Health’s biggest cost drivers next year are personnel and equipment. Salaries are going up by a combined $492,902, or 5.9%, over the current budget, although its offset by spending $389,557.
The agency is also spending an additional $564,282, or 14% on equipment. Gaultieri said the equipment is needed to comply with Centers for Medicare & Medicaid Services and IRS mandates.
To balance the increases, Access Health is putting off nearly $1.9 million in technology upgrades, resulting in an overall budget cut of $734,326.
Even with the increase, Access Health staff and members said the assessment of 1.85% is the lowest in the country. Washington and Maryland, both at 2%, are tied for second, while Indiana and the federally facilitated exchange are the only other ones with an assessment under 3%.
The increase comes as insurance carriers are seeking another round of sizable increases in premiums for policies in the marketplace next year.
Anthem Health Plans is seeking an average increase of 9.8%, Connecticare Benefits an average of 12.7% and Connecticut Insurance Company an average of 17.5%.
The Insurance Department is taking comments online through July 9. The agency is expected to hold a public hearing sometime in August before deciding on the request.
Access Health board members anticipated the assessment will be used as a reason, and said insurance carriers have the ability to find savings elsewhere. One suggestion was tougher negotiations with healthcare networks.
“Can you get your prices down with Hartford Healthcare by 0.2% to offset this?” state Healthcare Advocate Ted Doolittle asked. “I think you can.”
Board members also said they want to see the state push to bring down healthcare costs.
Office of Healthcare Strategies Executive Director Diedre Gifford noted her agency is holding its first hearing Wednesday to examine the rise in healthcare costs.
“The drivers of healthcare costs really need to be the focus,” she said.
