Since he became insurance commissioner in March, Thomas B. Leonardi has worked to dispel the public perception that the agency is unfriendly to consumers.
He stresses that the mission of the agency is to protect consumers and touts communication strategies–a revamped website, a Facebook page, Twitter–that make it easier for people to learn about and comment on proposed rate hikes. Some of his early moves have drawn praise from consumer advocates.
But there’s a rift between Leonardi and consumer advocates over how the department should handle requests by health insurers to raise premiums. It’s a disagreement about the role public hearings play in the department’s work, in shaping decisions or public perception. And in some ways, it points to a larger question about Leonardi’s job: Just how much can he please consumers when he is at times required to base his decisions on factors that have little to do with their requests?
The department’s responsibilities include ensuring that insurance companies remain solvent and able to pay claims. Leonardi says doing so ultimately protects consumers. But it’s not what people worried about the cost of their health care premiums tend to clamor for.
“They can’t focus solely on consumers,” state Healthcare Advocate Victoria Veltri said of the department. “If they did, they might be taking positions that may not take into consideration the solvency of insurers or the market balance. The nature of the job and the regulation, it’s conflicted.”
Veltri said the department does “a pretty good job” at trying to balance the interests of consumers and its other responsibilities, and she praised Leonardi’s efforts to make more information readily available to the public.
But Veltri disagrees with Leonardi when it comes to public hearings on health insurance rate hikes. She’s among the consumers and lawmakers who say hearings can help determine whether an increase should be approved or not, and who want a way to compel public hearings if necessary. A bill that has passed two legislative committees would require a public hearing for any increase above 10 percent.
Supporters point to a November public hearing on a request by Anthem Blue Cross and Blue Shield to raise rates by 19.9 percent. The request was ultimately rejected–a sign, they say, that public hearings make a difference.
But Leonardi takes a different view.
“I honestly think that the hearing itself probably had nothing to do with that conclusion,” he said.
“It may be hard to convince people of that,” he added. “But I know that our actuaries look at it from a truly actuarial perspective, and while it may be interesting to have people have their input in terms of the hearing, it’s probably not going to be the driver if in fact we’re doing the job right, which is to look at it from an actuarial and scientific basis.”
Leonardi’s comments echoed the words of Mark R. Franklin, the hearing officer who wrote the decision rejecting Anthem’s proposal. Many consumers testified about the financial hardships the higher rates would cause, but Franklin wrote that they were not the basis for the decision. By law, the commissioner can reject rates if they are considered excessive, inadequate or unfairly discriminatory.
“Affordability…is relative to each person and subjective, and although of overall concern, is not a standard for rate review within the statute or standard actuarial principles,” Franklin wrote.
Public hearing or public comment?
Supporters of more public hearings say the department seems to only reduce or deny rate increase requests when the matter has come before a public hearing, although the department has required insurers to decrease the size of their rate hikes for several individual and small group policies in recent months. Leonardi noted that the department’s process for reviewing proposed rate increases complies with regulations the federal government issued earlier this month.
Leonardi said he’s not opposed to hearings. There will undoubtedly be times when the political climate or a public outcry demands giving people an opportunity to speak at a public hearing, he said.
But in many cases, he said, there are ways to give people the chance to learn about rate proposals and weigh in without holding a hearing. The department’s website now provides more information about health insurance rate filings, including all documents and correspondence between the department and the company and summaries meant to make it easier for the public to learn the key details.
Leonardi said people can use the website to monitor the rate review process. They can also submit comments and questions through the website. Doing so–or commenting by fax or telephone–might be easier for people than coming to Hartford and waiting for the chance to testify at a hearing, he said.
“I wonder a little bit about appearance versus what we’re really trying to do,” he said. “What I think, and the conversations I’ve had with consumer groups, legislators, is we want transparency, we want to know that people have the right to be heard, that their concerns are being addressed. And I think we can do that in most instances without having a hearing.”
Leonardi also said mandating hearings could be costly–the bill is estimated to cost $2.245 million a year from added staff and hearing costs–and take up too much of his time. He said the agency has been working with lawmakers on an acceptable version of the bill, but said that the insurance commissioner should be the one to determine whether to hold a hearing or not.
Those who have advocated for more public hearings say hearings are a way to give people faith in the department’s decisions. And they disputed Leonardi’s view that the November hearing didn’t contribute to the rate rejection.
“I think scrutiny by the public makes a difference to all government agencies,” said Jennifer Jaff, executive director of Advocacy for Patients with Chronic Illness. “And the only way the public can scrutinize what the insurance department is doing with respect to rate increases is to have these kinds of public forums, public hearings, where consumers can show up and speak if they want, but more importantly, listen and observe the process and understand the process by which the insurance department makes these decisions.”
Veltri said there’s a distinction between having a public comment period and a public hearing. Public comments are one-sided, she said, while during a public hearing, people can give testimony and, under the proposed bill, the healthcare advocate and attorney general would be able to call witnesses. She said she would agree to a bill that does not mandate hearings but allows the healthcare advocate and attorney general to call one if a proposed increase is above a certain threshold.
During the November Anthem hearing, Jaff raised questions about the assumptions about health care utilization that went into Anthem’s request. Insurance department officials later asked similar questions, she said, and she questioned whether the department would have raised them if she had not.
In addition, Jaff said, public hearings can help people understand why rates are increasing. Much of the criticism focused at the insurance department last fall stemmed from a 47 percent increase that former commissioner Thomas R. Sullivan granted to Anthem without a hearing. The public hearing was about a separate, subsequent request covering different policies, but anger at the earlier increase fueled some of the opposition to the proposal.
The 47 percent increase applied to a plan that had provided minimal benefits and was being expanded to comply with federal health reform; a portion of the rate increase covered the cost of increasing the prescription drug benefit from $500 a year to $750,000 a year.
“Nobody explained that to the public,” Jaff said.
Waiting to see
Unlike his predecessor, Leonardi, 57, did not come to the job from the insurance industry, although he spent three years, beginning at age 30, as president of the Beneficial Insurance Corporation. He later founded and led a venture capital firm that advises and invests in the insurance industry.
He now runs a 137-person department charged with regulating what is by some measures the largest insurance industry in the country. He is part of an administration that sees the insurance industry as key for job growth, although Leonardi said that effort should fall primarily to the Department of Economic and Community Development.
In his first month on the job, Leonardi said he had more than 115 meetings, with companies, other commissioners, legislators and consumer groups.
One included Karen Schuessler, director of Citizens for Economic Opportunity, a group that called for Sullivan’s ouster last fall after he approved the 47 percent rate increase. Schuessler had been wary of Leonardi when his nomination was announced, but she said more recently that he seemed willing to listen.
“He’s been very accessible and willing to work with the advocates,” she said.
In particular, Schuessler was heartened by Leonardi’s role in stopping the National Association of Insurance Commissioners from endorsing a proposal that would have taken brokers’ fees out of the calculation of what insurers spend on administrative costs. Federal health reform limits how health insurers to spending no more than 15 to 20 percent of premium revenue on administrative costs, and insurance brokers are worried that including their fees in the administrative costs category will lead to a dramatic reduction in the fees.
Consumer groups have warned that taking brokers’ fees out of administrative cost calculations could raise the cost of health insurance. Leonardi was among a group of state insurance commissioners that kept the association from endorsing the proposal, saying he wanted to better understand how it would affect consumers.
As for her overall judgment of the new commissioner?
“We’re kind of waiting to see,” Schuessler said. She added: “I just hope he will strongly support hearings.”