Fearing Health Insurance Rate Hikes in the Wake of COVID, Senate Democrats Propose Caps, Subsidies

The number of people seeking medical care for COVID-19-related reasons has sparked fears that Connecticut insurance companies, set to file their rates by the end of July, may raise 2021 premiums to astronomical levels. In response, members of the Connecticut State Senate are proposing measures that may offset or prevent some of these potential costs.

In the “Juneteenth Agenda,” unveiled on June 19 of this year, the Senate Democrats offered a list of reforms in policing, education, housing, and healthcare, among other things. One of the proposals involves setting limits on premium hikes by insurers and provides state-level subsidies to Connecticut residents who cannot afford their premiums. 

State Sen. Matt Lesser, D-Middletown, co-chair of the Insurance and Real Estate Committee, said he wants to “move quickly.” He describes COVID-19 as a perfect storm: a pandemic that seriously endangers public health — as of Wednesday, Connecticut has confirmed about 46,500 cases and 4,300 deaths — combined with the loss of over a quarter of a million jobs in April as a result of the shutdown. For many, unemployment also means the loss of health insurance.

“That is the worst combination I can think of,” said Lesser. “We have to address this head-on.”

In April, Health Management Associates estimated that between 130,000 and 382,000 individuals in Connecticut could lose their employer-sponsored health insurance as a result of the economic shutdown.

State Rep. Sean Scanlon, D-Guilford, the committee co-chair, said that he receives calls every day from people in some of the most difficult moments of their lives because of COVID and the economic shutdown.

“People have had their lives changed in an instant,” he added. “I would hope that the insurance companies do not raise the rates of people this year.” 

Increased health insurance premiums are a nationwide concern.

California’s state health insurance marketplace, Covered California, conducted a study in March predicting that health insurance premiums could rise by anywhere from four to 40 percent in 2021.

However, the actual increase depends on a variety of other factors. Neil Kelsey, chief actuary for ConnectiCare, a company that insures 500,000 individuals in Connecticut, said that the company is considering a number of scenarios while preparing its filings for 2021.

So far, Kelsey said, the decrease in elective surgeries and visits to the doctor’s office has outweighed the increase in COVID-19-related claims. The company has received claims for only 584 hospitalizations related to COVID.

However, as the state reopens, there’s no telling how people will behave. There could be a rush of people scheduling the procedures that they put off during the spring. Alternatively, patients may continue to avoid doctor’s offices out of fear of catching the virus, opting instead for virtual appointments. New sanitizing procedures could also lower the number of people that a doctor can see on any given day. And, of course, there’s the question of whether a second or third wave of coronavirus could once again halt the country in its tracks.

A more recent analysis from Avalere Health found that the national average hospital cost for a COVID-19 patient comes to about $23,489 based on data collected between February and April 2020. Kelsey said that ConnectiCare had originally estimated the cost of a COVID-19 treatment at between $30,000 and $40,000, but he suspects that, given the number of people placed on ventilators, those estimates may actually be too low.

In addition to capping insurance premium increases, Lesser had proposed injecting 100 million public dollars into the state market in the form of subsidies and re-insurance. He wants to expand Medicaid and change certain aspects of how access health plans are structured. The Juneteenth Agenda pledged to put a stop to “junk” insurance — predatory lending plans which Democrats say have proliferated along with the virus.

None of these proposals have yet received firm commitments, according to Scanlon.

For the special session in July, Scanlon said, the committee is focusing on bills that would cap the cost of insulin and extend telehealth provisions. But Scanlon also said that the other provisions suggested by Lesser shouldn’t be ruled out.

“Plans on the exchange are unfortunately not as affordable as we would like them to be,” said Scanlon. “Every option that can lower the cost of healthcare for people should be on the table in the special session.”

State Sen. Kevin Kelly, R-Stratford, also a member of the insurance committee, agrees that the cost of healthcare is too high – he says that many people he has spoken with define it as the number one issue in the state —  but he said that capping increases in insurance premiums is a “misplaced focus.”

The goal, according to Kelly, should be to address the high costs of healthcare in general.

Kelly proposes a committee made up of individuals in the industry to create a series of “benchmarks” for the cost of healthcare through a peer-review process. Kelly describes this process — which was already underway before COVID-19 hit — as a way of “bringing best practices to the table” through collaboration.

Kelly also proposed a reinsurance program funded through the government as a way of keeping premiums low.

These proposals are part of a bill that so far has not been approved by the legislature.

Kelly said that while he does not believe COVID-19 has made these changes more urgent, he does think that the virus has forced Connecticut to embrace new technologies, such as telehealth.   

Efforts to address health insurance costs are taking place on the federal level as well.

On Monday, June 29, the U.S. House of Representatives passed the Patient Protection and Affordable Care Enhancement Act, which would allow people in higher income brackets to access premium tax credits, eliminating the so-called “cliff” that leaves middle-income individuals struggling to afford healthcare. It would also cap the amount people have to pay for premiums at 8.5 percent of their income, give $200 million to states in the form of a federal grant to establish state-based marketplaces and expand Medicaid coverage.

Lesser said the House bill was similar to what the Connecticut Democrats want to do on the state level, and that the reforms the Connecticut Senate Democrats were proposing would “complement the House bill very nicely.” He doubts, however, that the House bill will pass through the Republican-controlled Senate.

Kelsey said that the impact of federal or state policies on his company would depend on the specific provisions—at what level, for instance, the state decided to cap insurance premium increases. Premium tax credits, he said, could allow more people to purchase health insurance. 

“Anything that can be done to encourage people to not only purchase, but maintain coverage throughout the year, I think is important,” said Kelsey.

Scanlon and Lesser said they expected pushback from the insurance companies, but Scanlon said this pushback should not necessarily be a deterrent. Kelly said he hopes to continue having bipartisan conversations about these issues.

“This is a healthcare crisis first and foremost, and an economic crisis second,” said Lesser. “And we’ve got to address the healthcare crisis.”