Monday, May 27, 2024

Public Hearing on Insurance Rates Review

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By Marc E. Fitshsenoir, Investigative Reporter
Connecticut Inside Investigator (CII)

[CII is a nonprofit newsroom on a mission to inform the people of Connecticut through investigative journalism and inspire the public through engaging stories.  We envision a better Connecticut where corruption has been rooted out.]

Executives for several insurance companies regulated by the State of Connecticut said their requested rate increases for next year reflect the increasing cost of medical care in Connecticut, during a public meeting on proposed individual and small group insurance rate increases that would affect roughly 190,000 residents.

The rate increase request, which averages 12.4 percent across individual and small group markets offered by companies like Anthem, Cigna and ConnectiCare both on and off the state’s insurance exchange, comes on the heels of last year’s rate increase request of 20.4 percent, and has similarly elicited outcry by elected officials and the public.

Ultimately, the Insurance Department last year approved average rate increases of 12.9 percent for individual plans and 7.9 percent for small group plans. The proposed rate increases do not affect large group plans offered to residents by their employers, which are regulated by the federal government.

Representatives from those insurance companies, however, say the proposed rate increase this year reflects the trend of increasing medical costs, recovery from the COVID-19 pandemic, medical service consolidation, public policy passed by the legislature and unwinding Medicaid emergency measures during the pandemic.

“We are now seeing the return of cost trends we were seeing pre-pandemic,” said Brandon Rousseau, sales director for individual small group and large group plans for Anthem, during the hearing. Rousseau said they are seeing spikes in utilization for many services post-pandemic, including behavioral health services.

Rousseau also said legislation passed this year adding restrictions to step therapy, coverage of in-home hospice care, shortening utilization request review time frames and “premium taxes and assessments to fund various state agencies and public health programs and dollars to underwrite the state exchange,” are also factored into their rate requests.

“While these services might be the right priorities, they come with a cost that factor into rising premiums and cost-sharing,” Rousseau said. “While Anthem fully supports providing members access to healthcare, these additional state mandates increase costs, with the individual and small group markets bearing the cumulative burden of these increases.”

Mark Meador, president of ConnectiCare, said his company saw losses totaling roughly $100 million over the years 2021 and 2022, but that the increasing cost of medical care is driving their rate increase.

“The amount we pay to hospitals, pharmaceutical companies and other healthcare providers drives the cost of care to our members, these costs are increasing,” Meador said, adding that some service providers have requested reimbursement three times higher than the state’s cost-growth benchmark. “Connecticut’s healthcare providers need to be held accountable for increasing their charges just as the state’s insurance companies are being held accountable. Unfortunately, insurance companies alone cannot control the underlying cost of care in Connecticut.”

Dr. Deirdre Gifford, executive director of the Office of Health Strategy, highlighted that the requested rate increases far outpace the healthcare cost growth benchmarks set by the state and objective third parties, which for 2024 is 2.9 percent. Commercial insurance costs in Connecticut increased over the state benchmark more than any other benchmarking state, according to Gifford’s presentation.

According to Gifford’s presentation, healthcare prices in Connecticut were far higher than even in neighboring states like Massachusetts and Rhode Island and noted that hospital prices vary wildly in Connecticut, ranging from 170 percent of Medicare price to 310 percent of Medicare.

“It’s not possible to explain these variations in price based on quality differences,” Gifford said.

The insurance company executives testifying before the Connecticut Insurance Department said they are trying to negotiate lower rates with healthcare providers and trying to implement programs to lower costs, but some Connecticut organizations and lawmakers from both sides of the political aisle aren’t buying it.

Connecticut Attorney General William Tong, who has been outspoken in his opposition to rate hikes this year and last, said insurance companies justifying rate increases based on market trends is a “self-fulfilling prophesy,” as the insurance companies estimate what the increase medical costs will be, build it into their premiums, and then healthcare providers rise to meet those predicted increases.

“These requested increases are excessive, and they are unjustified,” Tong said during the press conference, noting that the trend predicted by the state and even Anthem is far less than the trend costs insurance companies are using to justify their higher rates. “Totally unsustainable and cannot be borne by the families of this state.”

Speaking outside the press conference, Rep. Tom Delnicki, R-South Windsor, said that insurance companies need to be held accountable. “I’ve heard the trends time and time again, but when you look at the gross profits for the insurance industry, for those particular companies, they’re huge.”

“Combine that with Aetna laying people off now? C’mon, really?” Delinicki said. “And when you take a look at what the CEO’s are earning, they’re huge, millions of dollars. The profits of the companies are in the billions. I just can’t accept the reasons I’m hearing for any kind of increase.”

Aetna’s parent company, CVS, just announced more than 500 layoffs coming to Aetna following the expiration of an agreement between CVS and the State of Connecticut to maintain a certain number of jobs in the state.

The Connecticut Citizens Action Group (CCAG) was at the legislative office building distributing their press releaselaying out those numbers — showing gross profits for companies like Cigna, at $148 billion, and Anthem at $27 billion, while also highlighting that those same companies had spent billions on stock buybacks.

“We are sick and tired of corporate interests getting policy makers to punch down and perpetuate the lie that patient protections and utilization are the reasons that healthcare is so expensive,” said CCAG Executive Director Tom Swan. “We need to consider options like banning use of premium dollars for stock buybacks and transparency around vertical integration.”
Tong — who was joined by Sen. Jorge Cabrera, D-Hamden, and Sen. Tony Hwang, R-Fairfield, who serve as co-chair and ranking member respectively on Connecticut’s Insurance and Real Estate Committee — said it may be time for Connecticut to have greater power in considering these rate increases, such as being able to request documents, gather evidence and examine witnesses, similar to hearings held by the Public Utilities Regulatory Authority (PURA).

They also believe that Connecticut’s hospitals must be called to the table, as the insurance executives all listed hospital costs as one of the driving factors, particularly as hospitals buy up more and more private practices, and because hospital costs vary wildly from hospital to hospital.

Under questioning during the Insurance Department meeting, the insurance executives admitted that they do not actually negotiate with hospitals on a service-by-service basis. “You don’t actually negotiate over the cost of services? How do you manage costs without negotiating the actual unit costs of those services?” Tong asked at the press conference.

“We’ve seen an entire decade of near double-digit increases every single year,” said Sen. Hwang. “Healthcare insurance is critical, but it is absolutely unaffordable, and the rates of increases are unsustainable, faster than even our high inflation rates we’ve experienced.”

However, Tong and other lawmakers acknowledged that no matter the public outrage, the Insurance Department will most likely approve some increases for premium rates.
“Until this process becomes more rigorous, more demanding, where we can examine witnesses, I fear we’re going to get the same result,” Tong said.

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