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Health insurers, in a hearing with the State of Connecticut Insurance Department on Tuesday, blamed lingering COVID-19 costs, an increased use of specialty drugs and a return to pre-pandemic demand for healthcare as reasons to significantly increase health insurance premiums for 2022.
Anthem Health Plans, which covers 1.2 million members across the state, has asked for an average increase of 12.3 percent in premiums for its individual plans, which cover 28,000 people, and 11.5 percent for its small group plans, which cover 25,500 people. The company also covers a large number of individuals by providing plans to large corporate clients.
Anthem estimated that COVID-19 costs, including testing, vaccination and treatments, would account for between 7 and 8 percent of its premium increases. Anthem said it also expects that the 2020 drop in demand for elective procedures will rebound to normal levels.
ConnectiCare Benefits Inc., which covers 17,900 people on its off-exchange small group plans and over 81,000 people on its on-exchange individual plans, is asking for increases of 7.4 percent for both. The company attributed 2.2 percent of the increase to costs coming from COVID-19, according to the company’s filing.
In a hearing with the Connecticut Department of Insurance on Tuesday, insurers also pointed to the perennially growing costs of healthcare as motivation for the rate increases.
But Ted Doolittle, the Healthcare Advocate for the State of Connecticut, said the underlying reasons for that rise in healthcare costs wasn’t clear.
“Starting around 1980, we’ve seen the trends going up like a trek up Mount Kilmanjaro, and the health insurance industry has not been able to deliver internationally competitive health care prices to the Connecticut families,” said Doolittle.
Neil Kelsey, vice president and chief actuary at ConnectiCare, and Tu Nguyen, Anthem’s lead in actuarial strategic planning, said that prescription drug costs were a major driver in the increase of healthcare costs, including specialty drugs and therapies. Kelsey said this increase overshadowed the rise in inpatient and outpatient care costs.
Steven Ribeiro, the regional vice president of sales at Anthem, also attributed some of the increases to the “ongoing reshaping of healthcare providers in our state” as well as to state legislation passed in July 2020 that will cap the cost of insulin beginning in 2022 and an expansion of telehealth services.
“While Anthem fully supports providing members with access to affordable prescription drugs and expanding the availability of telehealth services, each of these additional state-mandated, non-essential health benefits increase costs, with the individual and small-group markets bearing the burden of these increases,” said Rebeiro.
Ribeiro said that premium taxes, assessments to fund state agencies and run public health programs, in addition to the cost of underwriting the state exchange, accounted for 5.3 percent of the proposed 2022 premium rate increase.
Kelsey did say that his company expected subsidies from the American Rescue Plan to encourage a healthier subset of people to purchase health insurance. Kelsey said this would translate to a decrease of about 0.8 percent in ConnectiCare premiums.
Aetna, Harvard Pilgrim and United Healthcare are asking for increases of around 14 percent. Oxford Health asked for an increase of 15.8 percent for its small group policies, which cover approximately 47,000 individuals.
“Pricing from a compassionate perspective”
Democratic and Republican legislators and members of the public pushed back against the rate increases.
“We are not in the position to be able to survive an increase of this capacity … the average individual in our community is not making that kind of increase in their salaries,” said State Sen. Saud Anwar, D-South Windsor. “Your decision today will lead to [an] increase in the number of people who will be uninsured.”
Doolittle said that there were questions that still needed to be answered. He said insurers needed to provide information about which hospitals and providers are the source of the excess costs, what the deductibles and out-of-pocket costs are on the health plans, and how frequently the insurance companies are denying people’s claims. He also called for greater transparency with patients about the healthcare costs behind their bills.
State Rep. Kerry Wood, D-Rocky Hill, said she wanted to know how many people were reaching their deductibles. She added that there needed to be more competition on the Connecticut Insurance Exchange and greater access to preventative care.
State Sen. Tony Hwang, R-Fairfield, said that the high cost of premiums should be an incentive to legislators to look at programs such as benchmarking, importation of drugs from Canada and Gov. Ned Lamont’s proposal of fining companies that charge excessive amounts for prescription drugs.
Connecticut Insurance Commissioner Andrew Mais also said that he had received multiple emails from constituents asking why people vaccinated for COVID-19 should be asked to bear the additional healthcare costs of unvaccinated individuals.
Representatives of the insurance companies said that under the Affordable Care Act, the companies are not allowed to discriminate based on vaccination status for COVID-19. Kelsey said that he had heard of employers charging unvaccinated individuals a higher employee contribution rate, in the same way that they might for individuals who smoke.
Last year, companies received approvals for rate increases that were vastly lower than requested. Anthem, which asked for a 9.9 percent increase for its individual plans, was approved for a 1.9 percent increase. ConnectiCare, which requested a 5.5 percent increase for its individual plans, was approved for a decrease of 0.1 percent.
State Rep. Tammy Nuccio, R-Tolland, asked about companies’ administrative costs. She said that the insurance companies should plan to “break even” for a few years.
“I would highly encourage any carriers out there… to be compassionate and think about pricing from a compassionate perspective at this time,” she said.