As insurers continue to record hefty profits, the annual increase in health insurance premiums recently approved by the Connecticut Insurance Department will further burden patients already struggling with healthcare costs.
This double-digit increase, following a similar one last year, may lead to the impossible decision between a more expensive comprehensive plan and one which is affordable but with substantial out-of-pocket costs and more limited coverage. The harmful consequences of these changes cannot be ignored as rising healthcare costs continue to pose a hardship to patients nationwide.
Data from the Kaiser Family Foundation in 2022 show that four in ten adults have delayed or gone without medical care due to cost. As practicing physicians, we continue to see the negative impacts of this choice almost daily, an effect seen disproportionately in Black and Hispanic populations and in those with lower income. Among the insured, approximately one-third already worry about affording their monthly premium, and an astounding 44% reported concern about affording their deductible before health costs are covered.
The American College of Physicians continues to advocate for a system where everyone has coverage for and access to the care they need, and at a cost they and the country can afford.
Payment and delivery systems must be reformed to put the interests of patients first, by supporting physicians and their care teams in delivering high-value and patient-centered care. This should occur in a health system that ameliorates social factors that contribute to poor and inequitable health, overcomes barriers to care for vulnerable, underserved and disadvantaged populations.
There is no better example than the current one that cost remains a significant concern, and efforts must be focused on controlling these premium increases which shift costs onto insured persons who already are struggling to pay for their medical care. The stories of patients forgoing or rationing essential medications leading to preventable complications are innumerable and constant in our practices. One recent patient had the covered screening mammogram last year but delayed the recommended diagnostic follow up and biopsy due to cost and now has a newly diagnosed locally advanced breast malignancy. Others have eye damage from diabetes, strokes from high blood pressure, or recurrent hospitalizations for congestive heart failure, all largely preventable but occurring because they cannot afford to remain on important medications. Many patients struggle to live independently because of large copayments required for devices such as walkers, shower chairs, and bedside toilets.
Even after the requested increases of 12.4% for individual health plans and 14.8% for small group policies were reduced to 9.4% for individual and 7.4% for small group plans, limiting profit margin to 0.75%, the increase is substantial and follows the average 12.9% increase last year. This still far exceeds the nationwide median proposed increase of 6%, and both far outpace health insurance spending growth of 2.9% over the last 20 years, according to a Kaiser Family Foundation review.
Acting Healthcare Advocate Sean King summarizes this well by saying “if families and their employers must cut their operating margins in order to afford their health care, then insurers must also feel some of that pain.”
Administrative spending in the U.S. is nearly four times that of comparable countries and is a controllable driver of healthcare expenditures. As a transparent and essential part of regulation and review of rate change proposals, insurance carriers should fully and uniformly disclose the portion of premiums that are spent on administration, with a specific breakdown of premium dollars allocated to marketing, claims processing, other administrative expenses, profits, reserves, and payment for covered benefits.
Other reasons cited for the premium increases include pandemic-related costs. Yet, due to decreased utilization during COVID, the four major profit-driven health insurers saw a 200% increase in operating earnings during this time. Prescription drug pricing continues to be a significant driver of cost, and inconsistent access to these medications continues to be a driver of poor outcomes which must be addressed.
Fittingly, direct payments for inpatient and outpatient care remain the largest expenditure category as an appropriate percentage of the premium must be allocated to patient care under the Affordable Care Act (ACA). In the individual and small group markets, a maximum 20% of revenue can be spent on administration, marketing, and profit. Costs in excess of this must be returned to the consumer in some form as a rebate. In recent years over 80% of rebates have gone back to consumers on these individual and small group plans requesting rate increases. In 2023, these rebates are estimated to be $1.1 billion in the shadow of the proposed increases.
Efforts to address these drastic annual increases are imperative and must be based on transparent data. As Attorney William General Tong noted during the recent process, data must be transparent and the currently opaque process must be streamlined to ensure accurate assumptions on which rate increases are based. Payment reform is critical with emphasis on transforming the way health care is reimbursed and delivered and encouraging value-oriented, rather than volume-based, care. Promotion of team-based care that emphasizes prevention as well as cooperation and coordination among physicians, hospitals, and other health care professionals will lead to better outcomes and less duplication with inherent cost savings.
Price and quality data must be transparent so that patients, employers, and payers are better informed about the actual costs and quality of health care services. Resources must be allocated with a focus on medical efficacy, clinical effectiveness, and need, with consideration of cost based on best available medical evidence to ensure that limited health care resources are directed to cost-effective services for the patients who need them the most.
The solution is complex, but consumers cannot continue to bear the increasing cost of profits for health insurance companies in an inefficient system while struggling to obtain vital health care. We welcome the discussion of how Connecticut can lead without our patients continually shouldering the burden of increasing costs and being forced to ration their healthcare. Our patients must come first.
Dr. Ruth Weissberger is the Governor of the CT Chapter of the American College of Physicians. Dr. Anthony Yoder is Co-chair of the chapter’s, Health and Public Policy Committee.