ConnectiCare could become third insurer to exit exchange today

It has been a tumultuous year for Connecticut’s state health insurance exchange, but the latest – and most significant – blow could come Monday if its largest insurer decides not to offer plans next year.

The insurer, ConnectiCare Benefits, is facing a Monday deadline to decide whether to leave the exchange in 2017 after a Superior Court judge in New Britain blocked a motion Friday afternoon that would have given the Farmington-based company more time.

Whether ConnectiCare will remain on the exchange has not been determined, and potentially could be decided based on how the state Insurance Department rules on a last-minute appeal submitted by the insurer Friday evening.

The appeal asks the Insurance Department to reconsider its decision to set ConnectiCare’s health insurance plan rates on the state exchange, Access Health CT, at lower-than-requested levels in 2017.

But the appeal, which the Insurance Department says should have been filed first, came one week after ConnectiCare filed a lawsuit against the Insurance Department.

ConnectiCare claims in the lawsuit that the Insurance Department did not grant adequate rates for its 2017 health insurance plans on the exchange. The insurer requested a temporary injunction that would have allowed it to postpone a decision on whether it would remain on the exchange next year.

The judge, Sheila A. Huddleston, said a temporary injunction could only be granted in situations where the status quo is preserved. In this case, Huddleston said, the status quo would be disrupted, as ConnectiCare would be allowed to avoid its contractual obligation to decide whether it intends to remain on the exchange by the deadline.

Huddleston denied the request for an injunction, and also denied a motion from the Insurance Department’s attorney to dismiss the lawsuit.

This left ConnectiCare officials with few options before the 5 p.m. Monday deadline, prompting them to file the expedited administrative appeal.

“We are asking that the Insurance Department consider all information relevant to ensure actuarially sound and stable rates to prevent disruption for the 50,000 exchange members who depend on ConnectiCare for access to high-quality health care,” said Michael Wise, who serves as ConnectiCare’s president and CEO. “ConnectiCare wants to remain a part of the Connecticut exchange and will continue to work actively to make that possible.”

ConnectiCare is pressing the Insurance Department to reconsider late adjustments to its requested rate increases for plans on the exchange next year. The agency evaluates rate filings from insurers annually, and is required by law to ensure the final set rates are not “excessive, inadequate or unfairly discriminatory.”

In an Aug. 23 amendment to its rate filing, ConnectiCare sought to increase premiums for its plans next year by an average of 27.1 percent – up from 17.4 percent in its Aug. 1 filing and 14.3 percent in its June 1 filing.

Instead, the Insurance Department approved a 17.4 percent increase, which matched the rate increase requested on Aug. 1.

But ConnectiCare officials contend new data that became available later in August – after a public hearing on Aug. 4 where state officials scrutinized the proposed rate increases – shows the on-exchange rate requests, as first amended, would not be adequate. They project $20 million in losses from their on-exchange plans this year.

ConnectiCare left its off-exchange rate requests unchanged, however, and asked for an average rate increase of 42.7 percent on those plans for next year. The Insurance Department rejected that request, telling ConnectiCare officials their proposed rates needed to be recalculated.

What if ConnectiCare leaves?

Should ConnectiCare choose to depart, it would have major ramifications for the exchange, which up until this year had been widely regarded as one of the strongest in the nation. Now, it could lose three of its four carriers.

Two insurers, UnitedHealthcare and the state’s health insurance co-op, HealthyCT, are already in position to withdraw from the exchange after this year. They insure about 13,000 customers on the exchange, which is about 12 percent of the total.

UnitedHealthcare’s decision to leave the Connecticut exchange – where its presence was small – is part of a nationwide withdrawal from all exchanges. HealthyCT, on the other hand, was forced off the exchange after the Insurance Department declared it “financially unstable.” The co-op lost financial stability in July after it was required to pay more than $13 million into a federal risk adjustment program under a provision of the Affordable Care Act.

These departures raised questions about Access Health’s ability to move forward despite losing two of its four carriers. Its officials argued the exchange would remain stable, even if appearances said otherwise.

But a ConnectiCare departure would have an even more widespread effect. ConnectiCare insures about 48,000 customers through Access Health, which is about half of all customers on the exchange.

Combined with those set to lose coverage from the two insurers already leaving, that would mean about 60,000 customers would not be able to purchase health insurance next year from the carrier they did this year.

If ConnectiCare chooses to leave the exchange, Anthem will be the only option for Connecticut residents looking to buy federally subsidized health insurance. About three-fourths of all plans sold through Connecticut’s exchange in 2016 qualified for federal subsidies to offset at least a portion of the cost.

Access Health CEO Jim Wadleigh and Lt. Gov. Nancy Wyman, who is chair of Access Health’s board of directors, say a one-carrier exchange could have a positive effect on the state’s ability to work with the insurer to craft better plan options. But some advocates who are monitoring increasing market concentration are gravely concerned about a marketplace with only one option for consumers.

“If ConnectiCare does decide to leave the exchange, we’ll adapt to that new landscape,” Wadleigh said. “While it’s true that competition benefits the consumer, in this case there could potentially be a silver lining for the residents of Connecticut. Anthem could create a more diversified risk pool, which could help them control and help stabilize the cost of the various policies it offers to customers throughout the state.”

Wyman said she expects “better negotiations” with Anthem in a one-carrier market, because the insurer would have more flexibility in designing plans for consumers.

There would no longer be a situation where one insurer has more risk – more unhealthy customers – than another, Wyman said. Instead, since multiple insurers would no longer be splitting the state’s healthy customers, there would be enough of them to balance out the less-healthy customers with coverage.

“We’ve enjoyed working with ConnectiCare,” Wyman said. “But if they choose to leave, then we’ll make this work.”

But for some advocates, the possible gains are not enough to overtake concerns about what is being lost – competition in the marketplace.

Matthew Katz, CEO of the Connecticut State Medical Society, said competition is at the center of the Affordable Care Act, and one-carrier exchanges are in contrast with that vision.

Anthem would have complete control over the plans it offers, not the state, Katz said.

“They have no control over negotiations whatsoever with the insurer,” Katz said. “The insurer has complete control to dictate cost and choice of products and plans, and has much more leverage against the state, quite frankly, when it comes to these issues, because if they pull out, there’s nothing.”

“They’re the last one standing, and they have all the leverage,” Katz said.

While Katz primarily objects to the one-carrier exchange on principle, he also has Anthem-specific concerns. Anthem’s network of health care providers, he said, “is much more restrictive and narrow” than others in Connecticut.

This could prevent some customers from having access to close and convenient health-care services, because they might be out-of-network.

Katz said regardless of whether ConnectiCare leaves or stays, Access Health has an obligation to pursue new carriers to join the exchange in 2018, ensuring that customers will have an adequate number of options available.

What if ConnectiCare stays?

Even before ConnectiCare announced its lawsuit and threatened to leave the exchange, Access Health employees were nervous about the future, Wadleigh said during an interview with the CT Mirror in mid-August.

“Some days, I go crazy,” Wadleigh said. “I’m like, ‘Holy crap, there’s so much change.’  But that’s what’s so exciting about this job.”

“We’ve got to adapt and adjust,” Wadleigh said.

Should ConnectiCare choose to stay, the exchange still faces numerous hurdles in the coming months. Wadleigh said many anticipated the “infancy” stage of the exchanges to last about three years. Now, he said, it seems more like five years.

Because of that, change needs to come at the federal level to stabilize exchanges, Wadleigh said. He identified three fixes to the Affordable Care Act that could help to accomplish that goal:

• Extend the federal reinsurance program – set to expire after 2016 – for an additional three years.
• Factor rising drug prices into the federal risk adjustment program, particularly the sharply higher cost of hepatitis C treatments.
• Make the eligibility cutoff for federal subsidies less steep.

Wadleigh made clear he does not blame the Affordable Care Act for rising health-care costs. Much of the increase, he said, has been driven by health-care providers and the pharmaceutical industry.

Although federal changes could strengthen the exchanges as a whole, Connecticut still has to prepare for fewer carriers next year. ConnectiCare and Anthem already insure the vast majority of customers on the exchange, and stand to gain by adding some of the generally healthier customers who purchased plans from HealthyCT and UnitedHealthcare.

Despite this, ConnectiCare officials are projecting a less-healthy customer pool in 2017, part of the rationale behind their substantial rate-hike requests. Insurance Department officials questioned their methodology during the public hearing on Aug. 4.

The exchange will continue its push to add new carriers in 2018, Wadleigh said. Whether they will succeed is uncertain, as recent efforts to add insurers like Aetna and Harvard-Pilgrim have been unsuccessful.

“We’re going to have to see – it’s hard to look into that crystal ball of yours,” Wyman said. “If there are other companies that want to come in, I’m sure Jim is going to be talking to them.”

In the meantime, Wyman said, the focus will be on continuing to ensure “good services” remain available to Connecticut residents.

But Katz has a greater sense of urgency. For him, there is a clear imperative to add more insurers in 2018.

“You have some competition, because you have two, but you still don’t have enough,” Katz said. “What we’re seeing in Connecticut is a consolidation in the regular insurance market and what could become a monopoly in the exchange market.”