CT’s top insurance regulator sees ‘shared sacrifice’ by limiting health insurers’ profit as consumer rates rise [Hartford Courant]

Limiting health insurers in Connecticut to a small profit margin coupled with double-digit rate increases borne by nearly 190,000 residents ensures shared sacrifice, the state’s top insurance regulator said Tuesday.

The Insurance Department announced Friday it scaled back 2023 health insurance rate increase requests. But higher prices for many beneficiaries and insurance plan participants are still in the double-digits, drawing criticism from consumer advocates and Democrats and Republicans in the General Assembly.

Commissioner Andrew Mais said at an online news briefing to discuss the rate increases that the decision to hold insurers’ profit to 0.5% may be seen by businesses as “almost no profit and that may not be tenable in the long run.”

“But again, this is a time for shared sacrifice,” he said. “As a department what we wanted to do was to make sure that we all sacrifice, including the insurance companies.”

Paul Lombardo, director of the Life and Health Division of the Connecticut Insurance Department, said regulators decided last year to limit to 3% profit and risk margin of carriers. “This year we took it one step further and limited it to half a percent,” he said.

By doing so, the Insurance Department reduced administrative expenses that contributed to a reduced premium, Lombardo said.

A spokeswoman for insurance carriers did not immediately respond to a request for comment.

Mais also said rates can’t be inadequate. “Companies have to pay their bills,” he said.

Health insurance increases are tied directly to rising medical and pharmaceutical costs, the Insurance Department said. Medical costs are up 8% to 10% next year and are increasing by 1-% to 12% for prescriptions.

The pandemic also is to blame, regulators said. Mental health services have been in higher demand following the public health crisis, providers have confronted more severe health problems as a result of delayed procedures and diagnostic testing and costs are higher due to COVID-19 treatment, testing and vaccinations.

The Insurance Department warned that prices could increase again if the federal government shifts the cost of COVID-19 vaccines and boosters to private insurers and the commercial market next year. The federal government now buys the vaccines and boosters and private insurers pay providers for administration.

Federal subsidies as part of pandemic relief will make a “huge difference” to Connecticut residents who are insured on the state health exchange, he said.

Requests this year by carriers in the individual market were reduced by the Insurance Department to an average increase of 12.9% from 20.4%. In the small group market, premium increases were pared to an average 7.9% from 14.8% sought by insurers.

Nearly 121,000 covered lives — health insurance subscribers, beneficiaries and plan members — on eight of 13 insurance plans on and off Connecticut’s Affordable Care Act Exchange face average double-digit increases next year in markets for individuals and employers with 50 or fewer workers.

About 66,000 people in three insurance plans will pay rates higher than last year, but short of double-digit increases. And health insurance costs will remain flat or were cut for about 20,000 subscribers, beneficiaries and others on two plans.

The Insurance Department said the small group market is shrinking. A significant number of small employers disappeared during the pandemic, Lombardo said. In addition, other options are available, including so-called level-funded health plans for employers who want to quit fully insured health care but are not ready to completely self-insure.

Stephen Singer can be reached at ssinger@courant.com.

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