Legislators consider more scrutiny of health insurance rate hikes

A hotly contested proposal to tighten state regulation of health insurance rate hikes didn’t make it through the legislature last year. But in the wake of recent fights over premium increases, several lawmakers are eager to revisit the issue.

So far, 10 bills have been introduced that call for public hearings or increased state oversight when health insurers seek to raise premiums. Supporters say the climate appears more favorable to getting one passed.

Protestors at an Anthem rate hearing in November

“I detect in the General Assembly widespread support for moving in that direction,” said state Sen. Edward Meyer, D-Guilford, who introduced a bill to require public hearings on health insurance premium increases.

The proposals follow a wave of consumer anger at rate hikes and criticism of the Connecticut Insurance Department. They also come as the federal government pursues its own changes aimed at strengthening the scrutiny premium increases get, although they will most likely not require changes in Connecticut because the state insurance department already has more authority to review rates than many other states.

Some of the proposed bills would require public hearings for premium increases, while others call for more changes to the rate review process or the insurance department’s authority. None have specific language yet.

“I think we reached a critical mass in terms of support to do this kind of bill this year,” said Victoria Veltri, general counsel for the state Office of the Healthcare Advocate and acting healthcare advocate. “I think that’s because of a couple of the rate requests that have gone in in the last year. And we’ve shown what can happen in a hearing, how the process can be more open and more questions can get asked.”

The hearing, held in November on Anthem Blue Cross and Blue Shield’s request to raise premiums by 19.9 percent for about 48,000 customers, drew consumers and state officials opposed to the increase, and acting Insurance Commissioner Barbara C. Spear ultimately rejected the request. The hearing followed a controversial 47 percent increase that the department granted without a public hearing for other Anthem plans, which had been required to add benefits to comply with federal health reform.

Last year’s bill, which passed the House but never came to a vote in the Senate, called for changes including requiring a public hearing if an insurer proposed raising rates by more than 10 percent, and allowing the healthcare advocate and attorney general to be parties to the hearing.

It also defined the terms “excessive,” “inadequate,” and “unfairly discriminatory.” By law, insurance rates cannot be any of those things, but state statute does not define the terms.

Insurers who opposed the proposal argued that it would politicize the rate-setting process and could leave insurance companies unable to pay claims. Then-Insurance Commissioner Thomas R. Sullivan also opposed the bill, arguing that it could lead to fewer carriers offering insurance in the state.

Keith Stover, a lobbyist for the Connecticut Association of Health Plans, said this week that the industry does not oppose rate review itself, but how it’s done is critical.

“I don’t think there is anyone who is opposed to a sort of rational, robust, actuarially based review of rates,” Stover said.

The concern from the industry’s perspective, Stover said, is “rate regulation with a political agenda,” setting an arbitrary limit on insurance rates or making regulation based on frustration that insurance is expensive or costs are rising too quickly when, he said, they largely reflect medical costs.

“If you start arbitrarily capping or limiting, you really get into a position where people are not going to be able to offer products in the market,” he said.

The federal government is also seeking to tighten rate review processes, although the changes will likely leave Connecticut and many other states’ processes intact.

A proposed rule recently issued by the U.S. Department of Health and Human Services would require any proposed rate increases of 10 percent or more for individual or small group plans to be reviewed to determine if they are unreasonable.

But that rule is intended as a backstop for states that don’t review health insurance rate hikes. Connecticut already reviews rates for individual plans and small- and large-group HMOs before they take effect. A federal fact sheet on the proposed rule cites Connecticut as an example of rate reviews that work, pointing to the rejection of the proposed 19.9 percent Anthem increase.

Insurance department spokeswoman Donna Tommelleo said the process the federal rule would require “is substantially what Connecticut has been doing.”

The rate review bills aren’t the only proposals aimed at making changes to the way the state regulates insurance.

Meyer and state Rep. Andrew M. Fleischmann, D-West Hartford, have introduced bills that would make the insurance commissioner an elected position.

Fleischmann said insurance commissioners appointed by governors of both parties have not been sensitive to the perspectives of those who purchase health care coverage. Proposals to strengthen the department’s reviews of rate hikes are a step forward, he said, but too weak.

“When you have an insurance department that receives its funding from the insurance companies and insurance commissioners whose experience is typically from within the insurance industry, you have a structure that’s sort of set up to give you the wrong outcomes,” he said.

The insurance department is funded through a levy on insurance companies.

Stover said it’s too early in the session to tell what the climate will be, “beyond the desire among a legislator or two to have a free shot at a press release.” And he noted that legislators considering changes that affect the industry will likely be mindful that it employs thousands of state residents. That can make efforts to rein in insurers’ administrative costs, for example, more complex, he said.

“For Connecticut purposes, administrative costs are jobs,” he said.

Meyer said he isn’t counting on his insurance commissioner bill to pass. “Some of my colleagues, when I’ve talked to them about it, have rolled their eyes,” he said. “Connecticut doesn’t like to change its steady habits.”

But he said he thinks the proposal can be effective even if the bill does not pass.

“I’m trying to send a signal out there, and even if that doesn’t get passed, to send a signal that we have got to have more oversight over the insurance department and insurance commissioner,” Meyer said. “I think we’re creating a climate here for change, that without necessarily getting the result, it will make a difference.”