Connecticut is among the three most aggressive states in the nation when it comes to forcing health insurance carriers to charge rates below the levels they seek, according to a new federal report.
The Government Accountability Office (GAO) said only North Dakota and New York regulators haggled carriers down more often last year than Connecticut, which has just five HMOs but a larger number of carriers offering other types of plans.
Under the Patient Protection and Affordable Care Act of 2009, Congress required the U.S. Department of Health and Human Services (HHS) to award grants to assist states in their oversight of premium rates; after disbursing $48 million, state applications were due Aug. 15 for more than $200 million more that will be awarded.
Under federal health reform, beginning in 2014 states can exclude carriers from health insurance exchanges that are forming around the country if those companies cannot justify the rate increases they impose.
The GAO found that those rate review mechanisms have varied widely to date, with some states undertaking only a cursory process and others plumbing deep into carrier finances.
In 62 percent of the cases heard in Connecticut in 2010, regulators disapproved carriers”™ requests or otherwise took actions leading to a lower rate or outright withdrawal of an application.
Utah led the nation in activist regulation, taking action in 75 percent of the cases it heard, while New York did so in 71 percent of carrier requests. By comparison, New Jersey ranked among the most lenient states with regulators there forcing adjustments in just 4 percent of rate requests there.
The Center for Consumer Information and Insurance Oversight cited New York, Maine and Oregon as examples of states that have effectively controlled premium increases through regulatory review of rates, in testimony this month to a U.S. Senate health committee that includes Sen. Richard Blumenthal of Greenwich.
In Connecticut”™s most closely watched case of the past year, last December the state Insurance Department rejected Anthem Blue Cross & Blue Shield”™s request for a 20 percent hike in what it charges for individual policies, which would have affected 48,000 members.
A trio of bills died in the most recent session of the Connecticut General Assembly that would have further expanded the state”™s ability to regulate insurance rates.
U.S. Sen. Dianne Feinstein proposed a bill that would allow the U.S. Department of Health and Human Services to reject rates in states where regulators are unable to do so by law, after regulators in her home state of California saw Anthem push through a 14 percent rate increase despite regulator pressure on the company not to do so.
In a conference call with investment analysts, Anthem parent WellPoint Inc. defended its rate setting process.
“We always price to what we believe forward cost will be, and we are assuming an up-tick in the trends and therefore, pricing to it,” said Ken Goulet, president of WellPoint”™s commercial business. “When I look at the market overall, I would say the market is competitive but very rational and seems to be pricing in the same way right now. ”¦ It”™s covering forward-looking costs and our forward-looking costs assume that there will be an up-tick.”
