In the midst of a public hearing last summer, after several insurance companies offered double-digit rate increases on their health care plans, Attorney General William Tong asked a series of questions that summarized the concerns of many people gathered at the State Legislative Office. Build that day.
“I understand that an actuarial analysis is undertaken to ensure that an insurance company has enough assets to pay its debts, correct? This is what the analysis shows: ‘Do you have enough money to pay the claims?’ he asked.
“It’s a consideration, yes,” replied Neil Kelsey, vice president and chief actuary of ConnectiCare.
“Do you also do an analysis to find out if your customers have the capacity to pay your premiums? Tong pressed.
“From an actuarial point of view? It’s not a consideration,” Kelsey said. “When we set tariffs, our tariffs cannot be excessive, they must be non-discriminatory and they must be adequate. These are the three stipulations or thresholds with which the actuarial analysis must comply.
State Representative Kate Farrar, a Democrat from West Hartford, issued a challenge for the state.
“I hear from the same nonprofits and small businesses in my district who struggle every year to provide essential health care benefits to employees,” she said. “I would encourage us to use a measure of consumer affordability as a central part of the insurance service rate review process.
Each year, when insurers propose rate changes for state on-exchange and over-the-counter health plans, the Connecticut Department of Insurance has the authority to approve, reject, or modify them. The department assesses trends in unit cost (the total expenses incurred by the business), service utilization and expected severity of claims. Rates cannot be excessive, insufficient or unfairly discriminatory.
Now advocates, elected officials and consumers are calling on them to add an affordability measure to the list.
This year, insurers asked the state to approve an average price increase of 20% on individual health plans, a request far greater than any proposed in recent years. By contrast, they sought an average hike of 8.6% in 2021 and 6.3% in 2020. The state has approved an average increase of 13% this year, though the cost of some plans will increase by as much as 25%.
“We asked lawmakers to require the Connecticut Department of Insurance to consider affordability for consumers and small businesses when reviewing rate applications,” said Lynne Ide, communications program manager and commitment to the Universal Health Care Foundation of Connecticut. “The ministry told us every year, ‘Look, we don’t have to do this legally.’
“We always think about how state policy affects ordinary people. The biggest complaint people have about health care is the cost and the sustainability of that cost.
Lawmakers frustrated with the demand for high rates this year say they plan to introduce a bill during the legislative session that begins in January that would change the state’s rate review process to include affordability of consumers as the norm.
“I would be really interested in revamping the rate review process, including the affordability review,” said Sen. Matthew Lesser, D-Middletown, co-chair of the Insurance and Real Estate Committee. “I don’t think we should be afraid of a more adversarial system. I think we should rethink what this process looks like.
“Even though we have made progress in reducing our uninsured rate, there is still a significant portion of our population that is uninsured and a larger percentage that is underinsured – people who have insurance on paper but cannot afford to access coverage when they are sick. I never understood why we would want to ration care based on people’s ability to pay.
Senator Saud Anwar, D-South Windsor, deputy chair of the insurance committee, said he would also support a change to the rate review process that includes adding affordability.
“I feel there is urgency because every day we don’t make it an obligation, insurance companies are raising prices,” he said. “As those prices go up, more and more people can’t afford it.”
While drafting a bill, Lesser said he would keep the safety and solvency of insurance companies as a consideration in the review process. “We shouldn’t back down from this,” he said. “But they can also look at affordability.”
Connecticut Insurance Commissioner Andrew Mais defended the state’s review process and praised his department’s work over the years.
“We are working diligently to make sure Connecticutans don’t pay more than they should for their health insurance,” he said in a statement. “We saved consumers in our state $365 million over four years by reviewing and reducing rate applications.
“We agree that the underlying and rising cost of health care must be addressed. That’s why we’re working with the Governor’s Office and the Health Care Policy Group on proposals for the next legislative session to reduce the growth in the cost of health care.
He did not give details on the proposals that could be presented during this session.
Some lawmakers have said the rising cost of medical care should be the focus of legislative reform, not the insurance department.
“We need to put pressure on the cost drivers, not the people who are covering people,” said Rep. Kerry Wood, D-Rocky Hill, co-chair of the insurance committee. “I feel like pressuring the insurance department in how they regulate plans completely ignores the main factor, which is the cost of health care.”
But for Lesser and others, the tariff review process is central.
Lesser said he would turn to the state Office of Health Strategy to determine how affordability could be defined in the bill. This year, OHS developed a tool called the Health Care Affordability Index, which uses several factors, such as type of insurance, family size, health status and age, to determine costs and affordability of health care.
The bureau also recently began setting annual benchmarks for the inflated cost of health care – requiring providers, insurers and other industry players to declare their annual price increases.
The program is designed to expose hospitals, medical practices and insurance companies whose costs exceed state-mandated targets. There is no penalty for those who exceed benchmarks, but officials say the annual reporting mandate would create public pressure to cut costs.
OHS also tracks annual primary care spending and sets targets for this.
“OHS views health care affordability as critical to the health and outcomes of Connecticut residents, as well as to the longevity and effectiveness of Connecticut’s health care system,” said Tina Hyde, spokesperson for the OHS. office, in a statement.
At least one state factors affordability into the insurance department’s annual rate review process: Rhode Island.
When evaluating affordability, Rhode Island officials consider trends, including historical rates for existing products and national and regional health insurance trends; inflation; insurers’ efforts to control administrative costs; the ability of low-income residents to pay for health insurance; price comparisons with other market rates for similar products; and insurers’ strategies for increasing affordability, according to an analysis by the Connecticut Office of Legislative Research.
The Rhode Island Insurance Commissioner also reviews state and federal requirements such as benefit mandates; costs of medical services over which the plans have limited control; the third-party payment system and the resulting reduction in consumer price sensitivity; and health plan solvency.
To determine whether tariffs are affordable, officials check whether insurance companies have met primary standards: increasing primary care spending, meeting certain quality of care and payment provisions, including an inflation cap on medical expenses when contracting with hospitals, financially supporting the exchange of health information and the adoption of a patient-centered medical house model (places where consumers can receive treatment from various specialists arranged through their primary care physician).
Connecticut health care advocate Ted Doolittle said he believes state policy already allows the insurance department to weigh affordability when approving or rejecting annual rates.
“I always thought that an aggressive, consumer-focused administration could start looking at the issues of consumer affordability and underlying pricing right now,” he said. “Historically, they haven’t. Insurers – who have a lot of influence over the insurance department, in many ways – have no interest in going down this road, for obvious reasons.
Doolittle said he would support a bill that would make affordability a standard in law.
“We live in a high-deductible world where almost everyone has to pay for all of their non-preventive care,” he said. “A generation ago carriers were on the hook starting with Dollar One, but now carriers literally have no skin in the game until I pay my deductible.
“Since Connecticut families have to pay the first few thousand dollars in medical bills, [they] have the right to understand exactly what price was negotiated on their behalf and why. »
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