Each year, health insurance carriers set health care premiums (the monthly cost to consumers) for all health insurance plans based on a variety of assumptions, which include predictions on utilization, projected enrollment, provider costs and more. These rates are submitted to the Colorado Division of Insurance (DOI), where they are scrutinized before going into effect.
The public can comment on these filings during the rate review process, a practice which CCHI has participated in for years as consumer advocates. While a little known and rather inaccessible process, public input during this process is a meaningful way to hold insurance carriers accountable for rising health care costs.
This year (with the exception of Denver Health’s rates which decreased and Kaiser’s rates which were kept fixed) there was a general trend of rate increases, with averages between 3-7%. And across the board, carriers assumed significantly higher costs for rural areas compared to metro counterparts. These market level trends are an important piece of the puzzle. There were tremendous variations in trend and utilization projections from carrier to carrier. Differing justifications for rate increases that do not follow market level trends likely mean that insurance carriers are thinking most about how to cushion their bottom line.
The rate review process was of particular interest to CCHI this year because it was the first time that carriers had to set rates for the Colorado Option plans. Most carriers failed to meet the required premium reductions in the initial filings on some, if not all, of these plans. The reasoning behind this is all relatively weak and requires a considerable amount of scrutiny.
Glossary:
Medical trend: Medical trend is the projected percentage increase in the cost to treat patients from one year to the next, assuming benefits remain the same.
Medical Loss Ratio (MLR) :The medical loss ratio (MLR) is the share of total health care premiums spent on medical claims and efforts to improve the quality of care. The remainder is the share spent on administration costs and fees, as well as profits earned.
Anthem
Based on the limited information we could glean from their filings, it would appear that the main driver of increasing expenditures is simply increased cost, despite their lower than expected medical cost experience last year. In general, we identified a lack of effort by Anthem to control price increases and instead largely passing costs on to consumers.
Anthem’s preliminary rate increase fell squarely in the middle compared to other carriers, but some of their specific rate assumptions raised eyebrows. Anthem’s provider price increase was significantly higher than all other carriers; this was surprising given their large share of the market, which generally means more power to negotiate with providers. Anthem also had an unusually high estimate of medical trend. We also found inconsistencies in Anthem’s reporting of their projected MLR. Further, Anthem has a consistent recent history of issuing rebates, meaning they are consistently overstating their MLR. They were the only carrier in 2019 to issue rebates, and had the highest rebates of any carrier in 2020 by more than $11M.
Anthem failed to meet the premium reduction targets on a number of Colorado Option plans and did not provide any explanation or justification for their individual market filings.
Read our letter to DOI about Anthem’s rates here.
Bright Health
Bright Health is the carrier with the most frequent consumer complaints and issues through CCHI’s Consumer Assistance Program. Their predisposition to deny claims and create a variety of obstacles for consumers to get care covered is unacceptable, and has been acknowledged by DOI through a recent fine levy. In general, there are a number of areas of inconsistency in Bright’s filing, which raises general questions about the thoroughness and accuracy of their filing.
Bright’s preliminary rate increase of 21% is alarmingly high. This overall rate increase does not follow typical actuarial logic, and the large increase in the rating factor for the West region is particularly concerning. This combined with their overall rate increase will lead to massive premium increases for Coloradans in the West rating area.Bright is also decreasing their projected MLR substantially with their proposed rate increase, to a level well below the national average, which seems to indicate is that they are trying to recoup costs for higher than expected claims. Bright is also seeking to increase their broker commissions substantially, which would potentially create perverse incentives in the market to enroll Coloradans in their products at a time when they are increasing rates and have a frustrating track record of mistreating consumers.
Bright failed to meet the Colorado Option targets for all their plans submitted and did not provide any explanation or justification for why.
Read our letter to DOI about Bright’s rates here.
Cigna
Another significant flag was Cigna’s projected MLR target of 78.84%, which is non-compliant with the MLR standards outlined in the ACA. Not only is this an egregious breach of regulation, this also raises concerns about the actuarial soundness of these calculations. While Cigna’s medical trend projections of 5.3% fell in the middle of the pack, this trend is still higher than a number of carriers. It also included an unusually high prescription drug utilization rate of 2.3%.
Cigna failed to meet the Colorado Option targets for all their plans submitted and have not provided a sufficient explanation or justification for why.
Read our letter to DOI about Cigna’s rates here.
Friday
As far as we can tell, with both Friday’s individual and small group plans, they are making no changes to their provider networks. In their filings, they express that their Colorado Option plans have the same networks as their other plans. Given the statutory requirements to retool networks and embedded incentives for carriers to innovate and incorporate more essential community providers, who are generally lower cost, this information indicates a fundamental lack of effort to meet targets and give consumers relief on rising coverage and health care costs, which should not be tolerated.
Friday is failing to meet the Colorado Option targets on all of their plans in the individual market and some of the small group market plans and have not provided sufficient explanation or justification for why.
Read our letter to DOI about Friday’s rates here.
Kaiser
Furthermore, Kaiser cites the establishment of a pregnancy special enrollment period (SEP) as driving an 0.5% increase in premiums. This assertion is ungrounded for two main reasons and DOI should hold Kaiser accountable for correcting the record on this matter. First and foremost, the pregnancy SEP for uninsured persons established in HB22-1289 does not go into effect until 2024, and thus should not be a consideration for the 2023 plan year. Second, there is insufficient evidence to justify a significant increase in rates even when the SEP goes into place. According to Connect for Health Colorado’s board meeting materials from June 2022, they note that there were fewer than 1200 uninsured births in Colorado in 2020. Other states who have similar SEPs in place have seen less than 1% enrollment impact, including fewer than 10 per year for the Washington D.C. exchange. Given this information, namely that the SEP is not in effect in 2023, we have further reason to believe that Kaiser’s finalized rate filings should indicate an overall decrease in premiums.
Although Kaiser did meet targets in several plans for the Colorado Option, there must be further clarity as to why none of their bronze and a majority of their silver plans do not meet the required premium reductions.
Read our letter to DOI about Kaiser’s rates here.
Rocky
Another large area of concern with Rocky is that they are introducing “gating” in rating areas 5 and 9. Gating presents consumers with additional barriers to accessing care and does not foster better or more equitable health outcomes. If anything, reducing claims through gating should lead to lower trend/utilization and ultimately a lower rate increase if not a rate decrease. Considering the burden gating puts on consumers and the inequitable outcomes it leads to that perpetuate racial and health disparities, Rocky’s addition of these practices in already high cost parts of the state is alarming. When combined with a rate increase and trend and utilization assumptions, Rocky’s rate increase requires much clearer justification than what is provided and likely necessitates this rate increase being substantially reduced if any increase is allowed at all.
Rocky fails to meet the Colorado Option targets on all of their plans and have not provided any explanation or justification for why.
Read our letter to DOI about Rocky’s rates here.
United
United’s filings regarding their MLR are inconsistent. All of this indicates they could easily operate these small group plans without these substantial rate increases and may need no increase at all and should arguably consider a decrease in rates. United is also paying a relatively high 4% for commissions and claims 3% for profit and risk. This all raises concerns and questions that these rate increases are unjustified and designed to pad United’s MLR and profits, despite their larger market share and better ability to gain favorable reimbursement rates to control costs. Ultimately these rate increases require close scrutiny, as they do not seem justified.
United has redacted its supplemental template, making it impossible to see whether their Colorado Option plans are meeting target rate reduction requirements.
Read our letter to DOI about United’s rates here.