Health Insurers Seeking Rate Hikes Of More Than 20 Percent In Connecticut

September 15, 2010  CTnow.com

Health insurers are asking for immediate rate hikes of more than 20 percent in Connecticut for some plans, citing rising medical costs and federal health reform laws as reasons.

Both issues — the new federal health care reform and rising medical costs — are significant drivers of the increases, according to filings by insurers with state regulators that were reviewed by The Courant.

It remains to be seen how much of the requests will be approved. Many people might not see an increase before Jan. 1, and these proposed changes would largely affect new business, mostly in the individual market.

But the overall price shift is the clearest indicator yet of what customers and employers can expect when health insurers submit proposed 2011 rates in late October and November. The current round of price requests launches a clash between insurers who say the increases are justified and consumer advocates and government officials who say the numbers are wildly inflated.

Aetna asked earlier this summer for an average 24.7 percent increase over last year for small-group HMO plans. State regulators approved an average increase of 18 percent for all of Aetna's small-group plans and 14.2 percent for large-group and middle-market plans, according to Aetna and an initial review of documents provided to The Courant by the state Insurance Department.

A complete tally of average price requests is not available, as the Insurance Department must decide on hundreds of health plans and variations of plans for the five major companies offering medical coverage in Connecticut. But an examination of the documents suggests that the requests might be even larger than those of recent years at a time when health insurance has become a political hot potato leading into the midterm elections.

In what might appear to be an oddity, companies are citing a huge range of effects that the health care reform mandates will have on plan prices — from near zero to well over 20 percent. The reason is that among all the plans, some already deliver the provisions required by health reform, while others do not.

ConnectiCare is seeking an average 22.2 percent hike for its individual-market HMO plans, according to a filing with state regulators. The insurer's plans would result in an average annual increase of about 13 percent for the overall individual market, including HMO and other plans; 12 percent for small-group plans; and 11 percent to 12 percent for large-group plans, said vice president of actuarial services Kevin Grozio.

Anthem Blue Cross and Blue Shield in Connecticut, by far the largest insurer of Connecticut residents, said in a letter that it expects the federal health reform law to increase rates by as much as 22.9 percent for just a single provision — removing annual spending caps. The mandate to provide benefits to children regardless of pre-existing conditions will raise premiums by 4.8 percent, Anthem said in the letter. Mandated preventive care with no deductibles would raise rates by as much as 8.5 percent, Anthem said.

It was unclear how those separate factors would add up for Anthem's plans, but those potential increases were all on top of rising medical costs.

CIGNA Corp. is asking for an increase of up to 1.3 percent for adding preventive care provisions, a 1 percent increase for waiving pre-existing conditions for children up to 19, and an increase of 14.5 percent for children from birth to 18 for new business, according to the Insurance Department.

Oxford Health Plans, a part of UnitedHealth Group, said the reforms will have a minimum impact, or less than 1 percent on premiums, according to the Insurance Department.

The proposed changes drew fiery response from government officials. On Sept. 9, the Obama administration's Health and Human Services Secretary Kathleen Sebelius wrote a letter warning the trade group America's Health Insurance Plans of a "zero tolerance" policy for "falsely blaming premium increases for 2011 on the patient protections in the Affordable Care Act."

The rate hikes aren't justified, said Steve Larsen, deputy director of insurance oversight in the U.S. Department of Health and Human Services' Office of Consumer Information and Insurance Oversight.

"We've done estimates," Larsen said in an interview. "Outside groups have done estimates, including The Urban Institute and Mercer, and the credible estimates come in in the 1 [percent] to 2 percent range for the impact of the health care reform provisions."

Connecticut Attorney General Richard Blumenthal said, "These outrageous requests demonstrate the need for stronger Department of Insurance authority to block unjustified health insurance premium increases, as I strongly advocated in the last session. My proposed bill would have allowed the commissioner to consider insurer profitability, required insurers to inform customers of rate requests and mandated an up or down ruling on all increases."

On Sept. 23, health insurers will be required to comply with an array of provisions that were part of federal health reform laws passed six months ago. In Connecticut, some of provisions were already extended to consumers by state law. Others were not, and they are cited as part of the reason for proposed increases to premiums starting Oct. 1.

"If you fail to recognize that the new requirements around benefits that were passed in federal reform were going to drive price, I think you're being intellectually irresponsible," said Keith Stover, a lobbyist with the Connecticut Association of Health Plans.

New regulations include eliminating cash limits on how much insurers pay per person each year, and throughout a person's lifetime. Insurers won't be able to deny coverage to children under 19 who have a pre-existing medical condition. Additionally, some federal laws duplicate what was already law in Connecticut, such as allowing young adults to stay on their parents plan until they reach age 26.

"Those are new benefits that are going to cost money," Stover said. "You can't just wave the magic wand and say, 'Do all these things, and they're free.' It just doesn't work that way."

Aetna believes that its requests were justified based on rising costs, said spokeswoman Susan Millerick.

"The changes in our rates for these groups are directly related to the cost of health care services in Connecticut, in terms of both the cost of the services provided to our members, as well as our members' increased use of health care services," Millerick said. "For example, we are seeing hospital cost increases alone in the low teens, coupled with increasing provider, pharmaceutical and new technology costs."

Some of the rate increases are clearly stated in cover letters submitted with the rate proposals while other insurers, such as CIGNA Corp., UnitedHealthcare and Anthem, do not say how rising medical costs and health reform laws will change rates.

"The underlying cost inflation hasn't changed," said ConnectiCare spokesman Stephen Jewett. "We could talk about the federal health reform bill adding some additional cost. We could talk about different things happening in the system that occasionally will spike up in the market, if we have a heavy flu season, or something like that. But at the end of the day, it's your baseline medical inflation from people utilizing the system more, having more access to more drugs and medical technology … the prices for those products just never slows down, and the utilization of those products just continues to grow."