A Fairfield County couple traveled to Hartford in June to urge regulators not to let Anthem Blue Cross and Blue Shield raise rates on close to 66,200 health insurance policies, including their son’s.
It was the first public hearing in nearly four years on a proposal to raise individual-market health insurance rates in the state.
A month later, the Connecticut Insurance Department rejected Anthem’s proposal and suggested it seek a smaller rate increase.
But what role did the public hearing have in that outcome? Not much, according to the department’s written decision.
The couple who testified, Arleen and Marc Sandy Block, said the insurance premiums were already unaffordable for their young adult son, who works seven days a week at a nonprofit. Arleen Block spoke of hours wasted trying to fix administrative glitches with the coverage and the struggle their son faced getting a prescription filled.
But the actuary who oversaw the hearing and reviewed the proposal, Paul Lombardo, wrote that affordability and service problems aren’t grounds regulators can use to deny a rate increase.
His 30-page proposed decision, which Insurance Commissioner Thomas B. Leonardi adopted, included comments critical of the value of the public hearing, particularly compared to the department’s usual practice for handling proposed rate hikes.
And so, even as the outcome won praise from state officials, the comments included in the decision reignited a longstanding dispute between the insurance regulator and consumer advocates over what role public hearings play, if any, in determining how much health insurance costs.
What goes into rate decisions
State Healthcare Advocate Victoria Veltri is among those who believe public hearings can influence the insurance department’s decisions and are crucial to ensuring public confidence in the rate review process. She’s sought legislation to require a public hearings for certain rate proposals, and said she’ll likely renew the effort.
Insurance department officials, by contrast, have characterized public hearings as largely irrelevant to decisions about whether to let companies raise rates. Those decisions, they’ve long maintained, are based on studying the insurers’ calculations and assumptions.
In his decision, Lombardo noted that state law allows the insurance commissioner to reject rates for three reasons: if they’re inadequate, excessive, or unfairly discriminatory.
“While it is reasonable to expect acceptable service delivery when paying for any product, service delivery failures are not factors used in rate review within the statute or standard actuarial principles,” Lombardo wrote, citing concerns raised during the hearing.
“Nor is affordability which is relative to each person and subjective, and although of overall concern, is also not a standard for rate review within either the state or federal statutes or standard actuarial principles.”
Lombardo determined that Anthem’s proposed rates were excessive, disagreeing with some of the assumptions the company used in calculating its rates.
He also rejected a rate proposal by UnitedHealthcare and approved an increase for ConnectiCare Benefits plans that was half what the company requested. There was no public hearing on either proposal, although at least one of the factors used in each decision was similar to that used in the Anthem decision.
Are hearings worth it?
Regardless of whether a hearing is held, the insurance department posts insurers’ rate requests and correspondence about them online, and allows people to submit comments.
Close to 140 people commented on the Anthem proposal, which showed that the public can make their views known to the department, Lombardo wrote.
As for the public hearing, Lombardo noted that 48 people attended, aside from parties to the hearing and department officials.
Thirty-four were media, lobbyists, government staffers or representatives of insurance companies, law firms or medical societies. He described the other 14 as “public attendees,” and said 12 were affiliated with special interest or advocacy groups.
“The unaffiliated general public was represented by one couple speaking about Anthem service problems on behalf of their son,” he wrote, referring to the Blocks.
But even if a hearing doesn’t draw a crowd of affected customers, is there a downside to holding one?
Lombardo suggested there was, writing that he was unable to ask Anthem certain follow-up questions because doing so after the record was closed would require him to give the healthcare advocate’s office a chance to seek more information, and reopen the record and hearing, taking up additional costs and time.
Veltri disagreed, saying the department could have simply left the record open longer initially.
But Lombardo wrote that the department’s regular process for addressing rate proposals “provides for more flexibility, more deliberation, and less cost.”
Similarly, insurance department spokeswoman Donna Tommelleo said in a statement that the agency “understands and respects the desire for public input,” and provides avenues for people to weigh in.
But, she added, “While a hearing provides another venue for the public to express concerns, the final rate disposition would be based on actuarial principles and would not differ.”
‘This has real impact on people’s lives’
Veltri, though, said there are reasons why hearings themselves are important.
They give the public confidence in the process used to evaluate rates — something that’s especially important now that people are required by law to have coverage, she said.
Having a third party, like her office, participate in hearings means they can cross-examine the insurance company officials, not just submit written comments. Veltri noted that Lombardo requested certain information from Anthem after others asked questions during the hearing.
And people who weigh in might raise issues that influence the department’s decision, she said. Some people at the hearing raised questions about whether Anthem’s assumptions about medical costs and members’ health care needs were accurate.
“If you want consumers to be engaged in their health care and you want consumers to not complain about the rates they’re paying for their health care because it’s a valid price for a premium that they have to pay, you need to offer them an opportunity to understand how the process works,” Veltri said. “And there really isn’t that opportunity without a hearing.”
Veltri requested the hearing on Anthem’s proposal under the terms of a 2011 agreement with Insurance Commissioner Thomas B. Leonardi. They reached the agreement — which calls for holding up to four public hearings per year, at Veltri’s request, on proposals to raise rates by 15 percent or more — after Gov. Dannel P. Malloy vetoed a bill that would have required a public vetting process for proposed hikes of at least 10 percent. The Insurance Department disagreed that the agreement would have covered Veltri’s request, but held the hearing.
Attorney General George Jepsen, whose office represented the healthcare advocate during the hearing, said public hearings are commonplace in the setting of electric and water rates.
“In every other context that I’m aware of, it’s an expected and reasonable part of the process,” he said.
A former legislator, Jepsen said he’s sat through many public hearings that went late into the night, and said there’s a value to letting people come in and express themselves, even if they stray off topic.
“For 66,000 people, this is a very significant issue of real cost to them, and part of what makes a democracy function is when people feel like they have the opportunity to take part in the process and express themselves,” Jepsen said. “This is not simply a bureaucratic function. This has real impact on real people’s lives.”
Did the public hearing influence the outcome in the Anthem case?
“It’s very difficult to me to speculate as to what might have been different or would’ve been different if it had been decided completely behind closed doors,” Jepsen said.
The previous public hearing was in 2010, when Anthem sought a 19.9 percent rate increase, which the department rejected. The hearing officer wrote that while many people testified about affordability concerns, that wasn’t a basis on which he could make a decision.
On other rate proposals that weren’t subject to public hearings, the department has taken a mix of actions in recent years, approving some and requiring companies to lower their proposed rate hikes in other cases.
Veltri said her concern is about process.
“The department could do the best review in the world, and actually, I think they did a very good review and I give them credit for that,” she said. “But I do think that we’re in an era of maximum transparency and consumer interest being primary.”