The Connecticut Insurance Department has rejected proposals by two insurance companies to raise health insurance premiums next year, and rejected the rates proposed by a third company new to the individual market.
Regulators approved plans the insurer HealthyCT to lower its rates.
In the case of Anthem Blue Cross and Blue Shield, the department deemed the proposal to raise rates by an average of 12.5 percent to be excessive, and directed the carrier to submit new rate proposals for review.
Similarly, the department asked UnitedHealthcare to submit new proposals for plans it intends to sell in 2015. The company doesn’t sell policies in the state’s individual market this year.
The department turned down the request by ConnectiCare Benefits Inc. to raise rates by an average of 12.8 percent, but approved a rate hike averaging 3.1 percent.
And regulators will allow HealthyCT to lower its rates by 8.5 percent, slightly less than the company initially proposed.
The decisions follow actuarial reviews of the insurers’ proposals that included assumptions about how much health care costs will rise, the medical needs of members and the financial impact of federal protections for insurers included in the health law commonly known as Obamacare.
The rate proposals cover individual-market health plans that the companies intend to sell through Access Health CT, the state’s health insurance exchange. The proposals by Anthem and HealthyCT also applied to plans purchased outside the exchange.
Anthem’s proposal
The proposal by Anthem, the state’s largest insurer, drew the most public scrutiny. The department held a public hearing on the proposals last month after state Healthcare Advocate Victoria Veltri requested it.
Many customers submitted comments questioning the need for a rate hike. Anthem officials attributed the proposed hike to rising pharmaceutical costs, increased use of medical services, reduced federal risk protection for insurers and federal fees that cover the cost of subsidizing people’s premiums as part of Obamacare.
In reviewing the proposals, Actuary Paul Lombardo suggested that Anthem should reduce or remove several factors it used in calculating premiums in 2014, including the estimate of how much the cost of covering medical services will rise.
Lombardo also determined that the federal government will likely provide more aid to insurers that face large medical claims than Anthem assumed, providing it with more money than anticipated.
Lombardo suggested that Insurance Commissioner Thomas B. Leonardi order Anthem to recalculate its rates using new assumptions that he suggested.
Anthem spokesman Scott Golden said the company is will review the ruling before deciding on its next steps.
“We respect the Connecticut Department of Insurance decision, and remain committed to being thoughtful and transparent regarding our proposed rate increases,” he said.
In a statement, Veltri and Attorney General George Jepsen — whose office participated in the hearing on Veltri’s behalf — said the hearing process and ability to cross-examine Anthem’s witnesses had “contributed significantly” to the department’s decision.
“We believe that full transparency contributes substantially to the department’s review in these matters, and we will continue to pursue public hearings when necessary to ensure a full vetting of carriers’ proposed rates,” they said.
Anthem’s individual-market plans cover approximately 66,200 policies, according to the department.
ConnectiCare’s proposal
ConnectiCare Benefits initially proposed raising rates by an average of 12.8 percent, but later lowered the proposed increase to 6.2 percent.
But Lombardo determined that the company’s assumption about how much medical claims costs would rise was too high, and revised it to a lower rate. As it did in Anthem’s case, the department also determined that carriers will have more financial protection from large medical claims, and required the company to apply that assumption to lower the rate increase.
The department is allowing the company to raise its rates by an average of 3.1 percent for 2015.
Currently, the company has 27,500 policies. ConnectiCare Benefits sells plans on the state’s health insurance exchange, but is a separate company from ConnectiCare, which sells plans outside the exchange.
HealthyCT’s proposal
HealthyCT, a new carrier in 2014, has among the highest rates of plans sold through the state’s exchange. It proposed lowering its rates, explaining in its filing to the department that it no longer needed to account for pent-up health care needs of new members who had been uninsured in the past.
But Lombardo determined that the carrier needs to account for some pent-up demand in its 2015 rates. He suggested the carrier factor in the need to cover some higher-than-usual use of medical services.
Overall, the company received approval to lower its rates by an average of 8.5 percent — slightly less than the company initially proposed.
The filing indicated that the plans currently cover 7,248 policyholders.