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State Insurance Commissioner Andrew Mais said Tuesday that the recently approved health insurance premium increases of 13 percent for individuals and 8 percent for small groups are needed as the cost of hospital care and prescription drugs continue to rise.
Cigna and ConnectiCare, which cover about 116,000 people in Connecticut, had requested premium increases in July of 20 and 25 percent, respectively.
At a public hearing in August, representatives from ConnectiCare said that the company lost over $65 million last year in the individual insurance market. They said the losses were due to previous denials by the State Insurance Department to increase rates.
The department reduced the initial requests from an average of 20.4 percent to 12.9 percent for individuals and from an average of 14.8 percent to 7.9 percent for small groups.
“We have to make sure the carriers are able to pay the claim when it comes due,” Mais said Wednesday morning, adding that one carrier in the Connecticut market had left the state after “trying for years” to pay the claims that came in. The company, HarvardPilgrim, will no longer be offering plans in the state as of January 1, 2023, according to the Hartford Business Journal.
Jim Carson, spokesperson for the department, told CT Examiner that HarvardPilgrim reported that Connecticut was a “difficult market” to offer competitive premiums while still being able to pay the rates that doctors and hospitals were charging.
Mais also said that the department was trying to convince more insurance carriers to offer plans in Connecticut.
“My own personal thought is that we need more competition in this market,” he said.
Deputy Insurance Commissioner Paul Lombardo said that hospital inpatient and outpatient care costs are increasing by 8 to 10 percent, and that prescription drug costs have increased between 10 and 12 percent. He also said that more people are seeking out medical care, especially for mental health services. Lombardo also that the people looking for care tend to be sicker than in past years.
“We believe that’s a direct result from folks delaying their care during the height of the pandemic,” said Lombardo.
According to Watson, the number of people using medical services had increased 10 percent over the last year. Normally, he said, the number of people using the same services increases three percent yearly.
Lombardo said the insurance companies will also have to deal with the cost of paying for COVID-19 vaccinations and boosters. Up until now, the federal government has covered the cost of these vaccines, but companies may need to begin footing the bill themselves as early as 2023.
Average premiums in Connecticut are $581 for individuals and $20,735 for employers in 2022.
Mais said that the federal subsidies that were created by the American Rescue Plan Act, which were recently extended to the year 2025, would soften the rate increases for people who were getting their insurance on Access Health CT, the state’s public exchange.
With the combination of federal subsidies and the approved rate increases, Lombardo said that a 40-year-old making about $40,000 a year who gets their insurance on the state exchange through ConnectiCare will pay about $10 more per month. A 40-year-old who makes about $68,000 a year with ConnectiCare insurance will pay about $25 more per month.
FiercePharma reported in August that many of the nation’s largest health insurance conglomerates reported profits in the first half of 2022. UnitedHealth, which requested premium increases of 13.9 percent and was approved for an 8.4 percent premium increase in Connecticut, made $10.1 billion in profit from January through June of this year. In the same time period, CVS/Aetna made $5.2 billion in profits, Elevance, which owns Anthem, made $3.5 billion and Cigna made $2.7 billion.
Mais underscored that the department limited the insurance companies’ profit margins to 0.5 percent this year, down from the 2-3 percent normally allowed.
“At the department, what we wanted to do was make sure that we all sacrificed, including the insurance companies,” he said.
In a statement released Tuesday afternoon, Republican Senators Kevin Kelly, R-Stratford, and Tony Hwang, R-Fairfield, criticized the Lamont administration for not adopting Republican legislators’ proposals to reduce health care costs.
“The Governor’s administration approved double digit rate hikes at a time when working and middle class families are already struggling with crushing inflation. Now the Governor’s administration is talking about ‘shared sacrifice.’ The people of CT have sacrificed enough already,” Kelly and Hwang said in the statement.
Asked what will happen after the federal subsidies end in 2025, Watson told CT Examiner that the Department of Insurance was “very concerned about the level of health insurance premiums in Connecticut” — an issue that he connected back to the cost of health care services.
The insurance department, along with the Office of Healthcare Strategy and the Office of the Healthcare Advocate, will be presenting an information session about the cost of healthcare on October 3. Lombardo said this would give them the opportunity to ask detailed questions of “stakeholders” like healthcare companies, hospitals and pharmaceutical companies.
“The one promise I can make to you as commissioner … we are not going to stop working at this,” said Mais.
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A previous version of this story mistakenly referred to Jim Watson, who works for DECD, rather than Jim Carson, who works for the Insurance Department.