Tong Calls On Insurance Department To Reject Rate Increase

HARTFORD — In a letter sent to Connecticut Insurance Commissioner Andrew N. Mais, Attorney General William Tong argued that rate increases sought by Anthem Blue Cross and Blue Shield, ConnectiCare, and United/Oxford are unsupported by evidence and must be rejected.

The proposed average individual rate request for the plan year starting January 1, 2025 is an 8.3 percent increase, while the proposed average small group rate request is an 11.9 percent increase. Pursuant to Connecticut law, in order for these rates to be approved, the Connecticut Insurance Department must determine that these requested rates are not “excessive, inadequate, or unfairly discriminatory.”

Tong notes that the rate increases proposed by these three insurers appear to exceed various inflationary and economic growth measurers.

“It is hard to comprehend why managed care companies fail to bring premiums and their underlying cost drivers in line with other products and services that consumers purchase,” Tong states in the letter. “Instead, we are informed each year of unit costs that far outstrip inflation as a forgone conclusion, without any explanation for why the costs cannot be curtailed through negotiation.”

Tong notes in his letter that while insurers are “uniquely positioned” to drive down costs when bargaining with healthcare providers, medical costs have continually been allowed to increase in ways that far exceed inflationary measures.

“Historically, insurers have cost-shifted these increases to consumers through direct rate increases and by offering higher deductible plans, instead of challenging the runaway unit cost problem directly through hard negotiations with providers. Thus, the overall cost of care continues to skyrocket. In the case of the individual and small group markets we are looking at here, individual consumers and small employers shoulder the burden of these ever-rising costs. It is long overdue for insurers to explain why they have been unable to rein in medical costs through their negotiations with medical providers, most importantly institutions which provide inpatient and outpatient hospital care,” writes Tong.

Tong goes on to provide detailed questions probing each of the rate hike requests, identifying numerous areas where the insurers rely on unsupported assumptions and questioning if each insurer uses Connecticut’s Cost Growth Benchmark during its contract negotiations with providers.

Tong’s letter also addresses further issues of double-counting, drug costs, and provider-based offices through which hospitals charge separate fees for typical office-based services (which some insurers have treated as outpatient services, thus forcing patients to pay high deductibles that would not typically be applicable to regular office services).

“It is abundantly clear that insurers are perversely disincentivized from driving down unit costs through negotiation of lower rates. The burden of proof falls on the insurers to justify their rates — to provide transparent, factually-supported actuarial analysis. The lack of information about PBM arrangements makes these applications facially deficient. Moreover, the carriers make sweeping statements about their annual trend but do not provide the data to justify their assumptions. I encourage the Insurance Department to thoroughly scrutinize these applications and reduce any and all components of the requested increases that are not actuarily justified,” Tong’s letter concludes.