Anthem proposes 12.9 percent rate increase

Anthem Blue Cross and Blue Shield, the state’s largest health insurer and a favorite target of advocates for more stringent regulation of rate increases, is seeking to raise premiums by 12.9 percent next year for more than 45,000 individual-market customers, including some whose plans were the subject of a controversial request that got denied last year.

In the rate request, which requires approval from the Connecticut Insurance Department, Anthem said the need for the increase stemmed from rising claims costs, increasing use of services by members, and state and federally mandated benefit changes.

“Anthem does not want the cost of health care coverage to continue to increase,” the company said in a statement Friday. “Unfortunately the use of various high cost services including hospital care, new technologies, other expensive diagnostic services, and prescription drugs are increasing–and we owe it to our members to cover those costs and ensure access to a broad network of providers.”

“In filing our rate application we were sensitive to the fact that individuals struggle to afford higher premiums,” it added.

Anthem has faced vocal opposition to past rate proposals, some of which have galvanized lawmakers and consumer advocates to push for more oversight of premium hikes.

The increase proposed this week applies to plans that were the subject of a controversial request to raise rates by 19.9 percent last year, which then-Acting Insurance Commissioner Barbara C. Spear rejected after a contentious public hearing, resulting in no increase. The plans are considered “grandfathered,” meaning they do not have to meet some requirements of federal health reform, including covering preventive services with no out-of-pocket cost to the members and increased annual limits on benefits.

The rate request also includes plans that were subject to double-digit rate hikes last year that drew anger from consumer advocates. At the time, Anthem and insurance department said the increases were necessary to account for new or expanded benefits required under health reform.

Overall, the plans subject to the proposed rate increase cover 45,624 people. Anthem has about 55,000 members in individual plans in the state.

State Healthcare Advocate Victoria Veltri, who opposed the request for a 19.9 percent increase last year, said she hadn’t yet reviewed the filing in detail Friday. But she said the size of the increase appeared to be in line with others this year.

“I would say based on the other filings that have been coming in this year, it’s on par with the other filings that have been coming in, in terms of overall percentage,” she said.

Insurance rate hikes have been a hot topic among state policymakers in recent years, inspired in part by those proposed by Anthem.

In June, legislators passed a bill that would have required a new public forum process for proposals to raise health insurance rates by 10 percent or more if the attorney general or healthcare advocate requested it. Insurance Commissioner Thomas B. Leonardi, who has the authority to hold a public hearing on any rate request, opposed the bill, as did the insurance industry. Gov. Dannel P. Malloy vetoed it.

In July, the Malloy administration, Leonardi, Veltri and Democratic legislative leaders reached a compromise under which Leonardi agreed to hold up to four public hearings at Veltri’s request on proposals to raise rates on individual or small group HMO plans by 15 percent or more.

The insurance department has received and posted four individual market rate requests in the past month, none of which exceeded 15 percent. Golden Rule Insurance Company is seeking to raise premiums 2.4 percent over four quarters, or 9.9 percent over the year, and a 9.9 percent increase for pharmacy benefits for more than 11,000 members. Separately, the company requested a 3.4 percent quarterly raise–14.3 percent for the year–for 5,235 customers. Celtic Insurance Company requested to raise premiums for 376 people by 3 percent per quarter for individual major medical policies beginning April 1, 2012, a total of 9.3 percent over the year. Globe Life and Accident Insurance Company requested a 9 percent premium hike beginning in December for one policyholder.

The insurance department is accepting public comments on each request, including Anthem’s.

In Anthem’s individual-market rate request, John Bryson, actuarial director for individual product pricing, wrote that claims costs are projected to continue to rise at nearly 8 percent through next year. He also attributed a 0.53 percent increase in claims costs to benefit mandates that took effect this year or begin in January, including a federal requirement that children up to 26 be eligible for coverage on their parents’ plans, a state requirement that oral chemotherapy be covered with the same cost-sharing as intravenous chemotherapy, and a state law prohibiting health plans from requiring people to use alternative prescription pain medications before using one prescribed by a doctor.

Bryson also wrote that the rate increase was lessened by 1.5 percent because of changes in administrative expenses, plan mix, medical loss ratio requirements and “other actuarial impacts.” Medical loss ratios are the percentage of premium dollars that are spent on medical care; under federal health reform, insurance companies must now spend at least 80 percent of premium dollars on medical care or quality improvement efforts in individual-market plans. If they don’t, they must issue rebates to customers.

Anthem expects the policies covered by the rate request to meet the medical loss ratio requirement.

In its statement, the company that the rate increases “represent an economic reality faced throughout the entire country” and said it was committed to controlling costs and improving health.

“We promote wellness for our members and communities-and we work with health care providers to encourage high-quality, evidence-based care, which costs less over time,” the statement said.