Terrell Blei, Policy and Outreach Fellow
Why is the sky blue? Why can birds fly?
As kids, we can’t help our own curiosity; we challenge the world around us by actively seeking out explanation. But, somewhere between youth and adulthood, we often stop asking why.
In July, the Division of Insurance released the proposed rate increases that carriers were seeking for 2018 health plans. Premiums are going up, and CCHI asked why. We channeled our childhood curiosity and asked for answers. Knee deep in financial filings, instead of Legos; armed with claims data, instead of coloring books—CCHI tackled Rate Review.
What’s Rate Review?
Every year health insurance carriers are required to file their proposed rate increases for approval with the Colorado Division of Insurance (DOI). The DOI works to ensure that the proposed prices are justified and not excessive, but also ensure the insurance companies can stay solvent for next year. As part of this process, Colorado consumers have the opportunity to submit comments, questions, and concerns based on the filings made available to the public.
It’s been shown that a robust rate review process can be successful in keeping insurance costs down. For example, this year in Oregon, many of the requested rate increases were not accepted. Oregon carriers proposed average rate increases ranging from 6.9% to over 20%, however finalized rates ranged from -1.6% to 14.8%; in some cases, the approved rates were 16% lower than the rates that were requested. See Oregon’s rate review in action here!
But, what about Colorado?
CCHI and some of our partners participated in the public comment period. We focused our comments on plans offered in the individual market, where requested premium increases averaged 27%. For the average Coloradan, such a steep price jump could be the difference between being able to afford life saving health care—or not. Fourteen Colorado counties will have only one carrier choice in the individual market for 2018—making it even more important to make sure prices are fair for all Coloradans. We encouraged the DOI to control what we thought might be excessive rate increases.
Here are some patterns we saw and pointed out to the DOI for further consideration:
1.We thought insurers were overestimating risk and morbidity.
Many carriers claimed the population that makes up the individual insurance market has become increasingly ‘sicker’—that’s called morbidity. Because unhealthy people have greater health costs, carriers proposed higher premiums. However, Colorado was recently reported as having the lowest risk score in the country—which means that there’s a healthier mix of people buying insurance in our state (read more on that report here). CCHI asked the DOI to make sure insurers were accounting for the relatively healthy population in Colorado.
2.Federal uncertainty was a large driver for increased rates.
Across health plans, we found that federal uncertainty about health care reform and potential changes to federal subsidies were significant reasons for proposed price jumps. We were concerned that insurers had responded prematurely to system changes that have yet to occur. Assuming federal subsidies are maintained, the proposed rates seemed too high. We asked the DOI to clarify this point with carriers or ask for clearer justification for their rates.
3.The public filings lacked transparency.
Carriers are allowed to redact evidence from the public filing that they feel contains trade secrets or proprietary information. We found large inconsistencies across carriers as to what was left public and what was not. We asked the DOI to create standardized rules on what can be claimed as confidential, and to have as much of the filing information be public as possible.
In submitting these general comments, along with plan-specific comments, we hoped our efforts would help all Coloradans, whose lives are affected by rising health care costs everyday.
So, what happened?
Last Wednesday, the DOI announced the finalized negotiated rates for the 2018 plans. The requested rate increases were largely approved, and consumers will face an average 26.9% rate increase in the individual market. However, DOI did reduce Cigna’s requested 41.2% increase to 30.9% and bumped Bright Health plan’s request from 15% to 27.4% to ensure their solvency.
Anthem’s rate increase of 30.2% was approved, meaning in the 14 counties where Anthem is the only carrier option, Coloradans will again see substantial premium increases.
Coloradans could still be at risk of even higher premiums unless Congress or the Administration finally commit to fully fund cost-sharing reduction payments for multiple years. The rates approved this week assume those payments will continue, but insurers would undoubtedly ask DOI to use higher rate increases if the cost-sharing reductions are not funded.
The increase in premiums does mean more Coloradans will qualify for financial assistance to lower their premiums, and those that already qualify, will see their tax credits increase to offset the increase in premiums. However, in Colorado there’s a lower percentage of people purchasing insurance on the individual market that are using the tax credits, meaning that a larger number of consumers will be hit by rate increases than in most other states.
If you want to learn more about rate review and how you can engage as a consumer watchdog, and ask your own ‘Whys’ in the future, contact us at CCHI.
Our full comments submitted during rate review can be found here.
Click here to read our press release on finalized rates.