Most of us say "thanks" without thinking.
Sept. 19--As health insurers file their first post-reform rate-hike requests, a rift is becoming clear: Insurers such as Aetna and Anthem are seeking far higher increases than federal officials and consumer advocates had anticipated.
At the same time, the years-old debate continues to rage about whether medical costs justify the upward march of health premiums.
For Connecticut employers and insurance customers anxiously awaiting prices for 2011, there is no simple rule of thumb. Some plans will rise sharply if they didn't previously offer features now mandated by reform, while others will see only minor adjustments, according to regulators, company filings and industry experts.
But one thing is clear -- the rate increases will heighten an already fevered debate about whether the health insurers are bilking the public or just passing along costs they cannot control.
Connecticut regulators in recent days approved increases of more than 20 percent on some health plans starting Oct. 1, including a series of rates requested by Anthem Blue Cross & Blue Shield, by far the largest health insurer in the state. The immediate changes mostly affect new customers buying health insurance on the individual market, not those who are in group plans through employers, or existing members of individual-market plans.
The higher prices, however, are a glimpse of what may be in store later this year when insurers propose new rates for 2011.
The major difference between rising prices this year and years past is the cost of new benefits added to health plans starting Thursday as mandated by the sweeping reform approved by Congress in March.
Insurers say the cost of new benefits will increase prices more than 20 percent for certain plans. But federal government officials and consumer advocates are crying foul, saying reform should raise premiums only 1 percent or 2 percent.
What people can expect to pay next year depends on three factors:
--Whether their current plan is comprehensive and includes the benefits required by reform laws.
--Whether insurers or consumer advocates win the debate over how much of the increases are justified.
--And how much the cost of medical care has changed for each of hundreds of health plans.
Reform laws also allow some plans to be "grandfathered," and not offer newly mandated features, with certain stipulations such as maintaining the same cost structure for customers.
"This is a monumental undertaking," said Keith Stover, a lobbyist with the Connecticut Association of Health Plans. "It's a lot to digest, and implementation is not going to be easy. It's not going to be smooth. It's not going to be without inflammatory rhetoric."
More Benefits, For A Price
The Connecticut Department of Insurance is completing its review of proposed rates for Oct. 1 from all the health insurers in the state. In a typical year, some health insurers file quarterly adjustments to their annual rates based on the usual rising trend in medical costs. But new this year was a sweeping change to health plans because of new provisions.
Regulators were flooded with proposals to raise rates on Oct. 1, just weeks before they will be flooded again with suggested rate hikes to 2011 plans.
The reform requires health plans to include the following benefits starting Thursday, although some were already mandated by state law in Connecticut:
--Young adults will be able to stay on their parents' plan until they turn 26.
--All new plans must cover preventive services, including mammograms and colonoscopies, without charging a deductible, co-pay or co-insurance.
--Insurers are prohibited from rescinding coverage for an error in an application or a technical mistake.
--Insurers must eliminate lifetime limits, the maximum dollar amount an insurer would pay for medical care of a particular person during his or her life; some now set limits such as $250,000 or $1 million.
--Similar to lifetime limits, the law also bans annual limits.
--Insurers cannot deny coverage to children under 19 for having pre-existing conditions.
No comprehensive data was available as of Friday on the size of the Anthem rate hikes. But the company had said individual-market plans would rise by as much as 22.9 percent for just a single provision in federal reform -- removing annual spending caps. Anthem also requested and received a 4.8 percent increase related to the mandate about pre-existing conditions for children, and increases of as much as 8.5 percent for mandated preventive care with no deductibles.
CIGNA Corp. is asking for an increase of up to 1.3 percent for adding preventive care provisions, a 1 percent increase for waiving pre-existing conditions for children up to 19 and an increase of 14.5 percent for children from birth to 18 for new business.
Oxford Health Plans, a part of UnitedHealth Group, said the reforms will have a minimum impact, or less than 1 percent on premiums.
ConnectiCare is seeking an average 22.2 percent hike for its individual-market HMO plans, according to a filing with state regulators.
Aetna asked for an average 24.7 percent increase over last year for small-group HMO plans and received an average increase of 18 percent for all of Aetna's small-group plans, 14.2 percent for large-group and middle-market plans.
Seeing these numbers, many people are outraged, including some federal government officials, politicians and consumer advocates.
"In so far as the companies are falsely blaming the health care reform law, these rate hike requests are particularly unacceptable," said Attorney General Richard Blumenthal. "The department rubber-stamped Anthem's ridiculous requests -- some as high as 22.9 percent -- with minimal public scrutiny and input. Anthem and other insurers are seeking massive, unjustified increases that will crush consumers and companies, especially small businesses, struggling with the worst economic downturn in decades."
Tom Swan, co-chairman of the Connecticut branch of the nonprofit Healthcare For America Now, cited the estimated rate increases of 1 to 2 percent as calculated by nonprofits, the federal government and The Urban Institute.
"These proposed increases are criminal and their rationale is dishonest at best," Swan said.
Health insurers have been mostly mum so far about the increases, other than comments within their written proposals to the state Insurance Department. On Sept. 9, Health and Human Services Secretary Kathleen Sebelius warned the trade group America's Health Insurance Plans to tell insurers "to stop using scare tactics and misinformation to falsely blame premium increases for 2011 on the patient protections in the Affordable Care Act."
Stover, the state lobbyist for the industry, sees the price increases as a matter of paying for added services.
"Last time I was at a Whole Foods butcher counter in Bishop's Corner, when I asked for a pound of hamburger, I had to pay for a pound of hamburger," Stover said. "When I asked for a pound and a half of hamburger, I had to pay for a pound and a half of hamburger. That's how it worked, and health care is vastly more important than beef prices, but when you buy a pound a beef, you pay for a pound of beef."
The dispute, however, isn't that more benefits will cost more, but rather how much more.
Insurance companies' financial filings show that their profits are narrower than those of many other industries, such as pharmaceuticals and biotechnology. And insurers will remain in the market and offer plans only if they can charge customers enough to cover what they pay medical providers as well as make a profit, said Jay Bhattacharya, a Stanford University professor who is both a medical doctor and a Ph.D. in economics.
"Now, on the other hand, insurance companies, of course, have incentive to sort of overestimate the actuarially correct amount," Bhattacharya said. "So, I think the right role of state regulators is to say, 'Well, here's what the actuarially correct amount is.' "
But those state regulators caught in the middle are buried in tens of thousands of pages of filings. At least one consumer advocate and the attorney general suggest that the Insurance Department is "rubber-stamping" insurers' requests.
"The problem for state regulators is going to be not just the actuarial problem ... but also the political problem," Bhattacharya said. "In a way, if they permit the insurers to raise premiums by as much as the insurers are going to want to, it will be politically very difficult. But if they don't allow it, then some insurers will drop out of the market."
Pricing insurance comes down to known and unknown information in a dizzyingly complicated set of variables ranging from the type of benefits offered to the age and health of people for a huge number of plans. In the case of unknown information, the added benefits pose new questions. If insurers must do away with annual spending limits, how many people will have huge medical bills and how much will that cost the insurers? What will the cost be to provide coverage to children who have pre-existing conditions?
The answers are subjective, Bhattacharya said.
"It's historically informed guesses. ... Part of the controversy has to do with, in this area, with what effect the law will have on the incentives for providers to provide care more efficiently," he said. "And some people are very, very optimistic. President Obama is a good example of this -- that the best ideas have been put into place to try to make care provision more efficient."
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