Recently, Connecticut health insurers submitted their individual and small group premium rates for 2023 to the Connecticut Department of Insurance (DOI) for review and approval. The DOI has scheduled a public hearing on the rates to allow decision makers and policyholders to have their say.
Unlike many states across the country that do not require rate approval, Connecticut’s DOI is responsible for ensuring that rates accurately reflect the costs associated with coverage. As an added measure of protection, the Affordable Care Act specifies strict standards on the amount of premium that must be spent on medical care. If carriers do not meet these thresholds, they are required by law to refund the associated dollars to their consumers.
The cost of care is a major challenge for individuals, families, employers, employees, taxpayers and insurers. Health care costs in Connecticut are among the highest in the country. When hospital, supplier and pharmaceutical prices go up, so do premiums. In 2019, CT insurers processed more than eight million claims totaling more than $4.8 billion in payments to hospitals, physicians, pharmacies, clinics, urgent care centers, laboratories, radiology and ambulance companies, among others.
As state regulators exercise their due diligence, it is important to understand the factors contributing to premium growth, including the push-pull between the cost of coverage and increased demand for new and existing products and services. , as well as pressure to increase supplier reimbursement. rate – the last two points having a direct and corresponding impact on the first. For instance:
Prescription Drug Costs: Pharmaceutical companies started the year by raising the prices of nearly 800 brand-name drugs by an average of 5%, with some raising prices by double digits for essential therapies that treat cancer, multiple sclerosis, hypertension and attention deficit hyperactivity disorder.
National studies predict that drug prices will rise significantly in 2023 and 2024. Recently enacted state laws limit the ability of health plans to contain pharmaceutical prices by encouraging consumers to use the most appropriate drug at the lowest cost. will undoubtedly exacerbate the challenge that is confirmed in the experience trend even if it is not immediately identifiable as a factor.
Provider fees: National data predicts that spending on hospital, physician and clinical services will accelerate, contributing to rising costs. Other consolidations between hospitals and medical practices that allow providers to take advantage of increased reimbursements are contributing to higher prices for consumers and employers. Studies have shown that consolidation does little to improve the quality of care for patients or curb the growth in prices for provider services, but it does significantly increase premium rates.
Covid19: Deferred care in the first half of 2020 has largely resumed, leading to more complex and expensive treatments. At the same time, services related to Covid-19 treatment, testing and vaccination are expected to continue.
Mandatory Benefits: Connecticut requires coverage for more than sixty-four specific treatments or services, including some that go beyond evidence-based guidelines recommended by major national health agencies. Although the cost of some mandatory benefits taken in isolation may be relatively low, their collective impact drives up the cost of insurance coverage for each person in CT.
Taxes and contributions: Premiums and taxes continue to be a significant factor in the overall cost of insurance. 2021 data acquired from healthcare providers shows that fully insured plans incur $359.6 million in assessments, taxes and fees per year; self-insured plans incur $74 million per year, which translates to a cost per member in the fully insured market of $591 per year and a cost per member in the self-insured market of $54 per year. The assessments are used to pay for many important initiatives in Connecticut, such as the operations of the Health Insurance Exchange ($32 million); programs under the Department of Public Health ($11.8 million); and the purchase of vaccines ($71 million). The question is whether it would be more appropriate to fund these programs through the general fund rather than a surcharge on policies.
Loss of Federal Funding/Premium Tax Credit for Exchange Members: The American Rescue Plan Act provided temporary federal grants to help low- and middle-income people pay their premiums. Without an extension of the program by Congress, the funding will expire this year.
Every person in Connecticut deserves access to high-quality, affordable care and coverage, but health insurance is expensive because health care is expensive. Affordability is the most pressing health care issue for employers and consumers, and policymakers should take action to address Connecticut’s high health care costs. These measures should include tackling exorbitant drug prices, ensuring that supplier clusters benefit employers and consumers, and reducing taxes on health insurance.
Fee review is not a magic bullet, nor does it solve many of the underlying problems that drive health care costs. This is a critical regulatory function that aims to ensure that state-approved premium rates for 2023 fully reflect factors contributing to rising healthcare costs.
Proponents of the public option often present the state-run “partnership plan” as an alternative approach to hedging. But, the partnership plan raised rates this year by 10% even after a $40 million bailout by taxpayers of federal COVID funds. Some believe the scheme is still underfunded and will require another compensation payment in 2023 just to remain solvent. Time will tell us.
Solving the problem of rising health insurance premiums requires a willingness to tackle the underlying cost drivers. The Office of Health Strategy (OHS) is doing just that in response to legislation passed by the General Assembly and initiated under a former Governor’s Executive Order. Policymakers must give this process, which has been underway for some time, a chance to succeed. Systemic issues require systemic solutions, not a single focus on a single entity in the pipeline. In the meantime, we hope that the Department of Insurance will assume its pricing responsibilities wisely and prudently.