CCM’s Cause: Fair Health Insurance Rates

Recent media reports take note of Consumers Council of Missouri’s work on behalf of consumers buying health insurance under the Affordable Care Act.  CCM is spearheading the effort to review proposed rates before they go into effect.

Health Insurance Costs to Rise, But How Much Depends on State

KBIA, July 8, 2015

The cost of health insurance premiums – the amount you pay each month for your plan –  will likely go up in 2016. If state governments approve insurers’ proposed hikes, the average cost for the most common health plans on the federal and state health insurance marketplaces will increase by 14 percent, according to an analysis of proposed rates by HealthPocket, an insurance research and comparison site.

The Affordable Care Act may be best known for requiring all Americans to get health insurance and for providing tax credits to keep costs down for low and middle income Americans. A less well-known component of the law requires insurers to justify increases of 10 percent or more for plans on the individual health insurance marketplace. At the beginning of June, the Department of Health and Human Services posted those proposed rates at ratereview.healthcare.gov. The final approved rates must be posted before the 2016 open enrollment period begins on November 15.

These upcoming increases will be revealing, says Kev Coleman, head of research and data at HealthPocket, because it’s the first time since the passage of the healthcare law that insurers will have a full year of claims to back up their pricing. The amount that insurers pay out in claims each year is the biggest factor behind the cost of health plans.

“When the first rates were established in 2014, they didn’t know quite who was going to enroll, how much health care was going to be used, and how expensive it was going to be to deliver that health care,” explains Coleman.

Final rate increases will likely vary from state to state.  In most states, a department of insurance collects the next year’s rate proposal, and shares it publicaly. Each state has the power to negotiate rates with companies. If a state and an insurer cannot come to an agreement, the state government can prevent that company from operating there.

In states that allow public comment, citizens can play a strong role in the rate review process, says Ed Weisbart, vice president of the advocacy group Consumers Council of Missouri. “When consumers can review the rate proposals and actually make informed, intelligent commentary questioning the validity of some of the assumptions that are in the proposed increases, that can have a dramatic impact on the ultimate rates,” he says. 

In five states, there’s not an effective rate review program in place, and the process of posting and reviewing rates is left to the federal Department of Health and Human Services (HHS). However, that agency does not have the power to negotiate rates; only the states can do that. Consumers in states without review programs, like Missouri, are then left in a vulnerable position, says Weisbart. 

States that have a review process allowing for a public comment period may do a better job of keeping rates down. Officials in New York, which has such a process, say consumer input plays a role in what is eventually allowed. Last year the average rate increase request in New York was 13.9 percent, but the final rates approved by the state averaged 5.7 percent.  “We have a pretty protective regime in place to protect consumers,” notes Matt Anderson, spokesperson for the New York Department of Financial Services.

This year, insurers in New York have requested an average 13.5 percent increase in their premiums, while in Missouri the average request is 19 percent. Coleman says there’s no simple basis for comparison for the costs of coverage from two states as dissimilar as New York and Missouri. Several factors, including how much competition there is between insurers and the relative health of the citizens go into the cost of monthly health insurance premiums.

Weisbart encourages consumers to be informed and advocate for themselves by reviewing the data on the HHS website and sending comments to both the federal agency and their congressional representatives. He says his organization is reviewing the rate requests for Missouri and will publish their findings publicly, “hopefully long before [the rates] become permanent.”