Connecticut health insurers recently submitted their 2023 individual and small group premium rates to the Connecticut Department of Insurance (DOI) for review and approval. The DOI has scheduled a public hearing on rates to allow policymakers and policyholders to participate.
Unlike many states across the country that do not require fee approval, the Connecticut DOI is responsible for ensuring that fees accurately reflect the associated costs of providing coverage. As an additional measure of protection, the Affordable Care Act specifies strict rules on the amount of the premium that must be spent on medical care. If carriers do not meet those thresholds, they are required by law to refund the associated dollars to their consumers.
The cost of care is a significant challenge for individuals, families, employers, employees, taxpayers and insurers alike. Health care costs in Connecticut are among the highest in the country. When prices for hospitals, providers, and pharmaceuticals go up, so do premiums. In 2019, CT insurers processed more than eight million claims totaling more than $4.8 billion in payments to hospitals, physicians, pharmacies, clinics, urgent care centers, labs, radiology, and ambulance companies, among others.
As state regulators exercise their due diligence, it is important to understand the factors contributing to premium growth, including the tug-of-war between the cost of coverage and increased demand for new and existing products and services, as well such as pressure to increase reimbursement to providers. rates – the last two points have a direct and corresponding impact on the first. For example:
Prescription Drug Costs: Pharmaceutical companies began the year by raising the prices of nearly 800 brand-name drugs by an average of 5%, with some raising their prices by double digits for critical therapies treating cancer, multiple sclerosis, hypertension and calcium deficiency disorder. attention with hyperactivity.
National studies project that drug prices will rise sharply in 2023 and 2024. Recently enacted state laws that restrict the ability of health plans to contain drug prices by encouraging consumers to use the most appropriate drug at the lower cost will certainly exacerbate the challenge presented by the experience trend even if it is not immediately identifiable as a factor.
Provider costs: National data forecasts that spending on hospitals, physicians and clinical services will accelerate, contributing to higher costs. Additional consolidations between hospitals and medical practices that allow providers to take advantage of higher reimbursements contribute to higher prices for consumers and employers. Studies have shown that consolidation does little to improve the quality of care for patients or restrain price growth for provider services, but increases premium rates considerably.
COVID-19: Deferred care in the first half of 2020 has largely resumed, resulting in more complex and costly treatment. At the same time, services related to Covid-19 treatment, testing and vaccination are expected to continue.
Mandatory Benefits: Connecticut requires coverage for more than sixty-four specific treatments or services, including some that go beyond evidence-based guidelines recommended by major national health organizations. While the cost of some mandated benefits alone may be relatively small, their collective impact increases the cost of insurance coverage for each person in CT.
Taxes and Assessments: Assessments and taxes continue to be a major factor in the overall cost of insurance. 2021 data acquired from health providers shows that fully insured plans incur $359.6 million in assessments, taxes and fees annually; self-insured plans incur $74 million annually, resulting in a cost per member in the fully insured market of $591 annually and a cost per member in the self-insured market of $54 annually. The assessments are used to pay for many important initiatives in Connecticut, such as operations for the Health Insurance Exchange ($32 million); Department of Public Health programs ($11.8 million); and the purchase of vaccines ($71m). The question is whether it would be more appropriate to fund these programs through the general fund rather than a surcharge on policies.
Loss of Federal Funding/Premium Tax Credit for Exchange Members: The American Bailout Act included temporary federal subsidies to help low- and moderate-income people with their premiums. Without an extension of the program by Congress, the funding will expire this year.
Everyone in Connecticut deserves access to high-quality, affordable care and coverage, but health insurance is expensive because health care is expensive. Affordability is the most pressing health care issue for employers and consumers, and lawmakers must take action to address Connecticut’s high health care costs. These steps should include addressing skyrocketing drug prices, ensuring provider consolidations benefit employers and consumers, and reducing taxes on health insurance.
Rate review is not a panacea, and it also does not solve many of the underlying problems that drive health care costs. It is a critical regulatory function and is intended to ensure that the premium rates the state approves for 2023 fully reflect the factors that are contributing to the growth in health care costs.
Advocates of the Public Option often present the Comptroller’s state “Partnership Plan” as an alternative approach to coverage. But, the Partnership Plan increased fees this year by 10%, even after a $40 million taxpayer bailout of federal COVID funds. Some believe that the Plan is still underfunded and will require another deficiency payment in 2023 just to remain solvent. Time will tell.
Solving the problem of rising health insurance premiums requires a willingness to address underlying cost drivers. The Office of Health Strategy (OHS) is doing just that in response to legislation passed by the General Assembly initiated under a previous executive order from the Governor. Policymakers must give that process, which has been underway for some time, a chance to succeed. Systemic problems require systemic solutions and not a singular focus on a single entity in process. In the meantime, we trust that the Department of Insurance will assume its rate responsibilities with judgment and prudence.