Rate Request: 12.8 percent increase; revised to 6.2 percent
Decision: Disapproved, reduced to 3.1 percent increase on July 29, 2014
12.8 percent increase; revised to 6.2 percentOn May 31, 2014, ConnectiCare Benefits, Inc. (CBI) filed a request to raise the base rate 11.8 percent for individual health plans marketed through Access Health CT, the state’s health insurance marketplace, beginning January 1, 2015. The company reported there are 27,500 policies currently in effect. This request equated to an average premium increase of 12.8 percent. This request was later revised to an average premium increase of 6.2 percent on July 27, 2014.
CBI stated the projected increase was based on increasing medical costs and greater demand for medical services – an effect known as “trend.” CBI originally anticipated a 3.84 percent annual trend which was later revised to 3.26 percent. The company also is accounting for $14.68 per member per month costs due to fees associated with the federal health care reform law. Those costs include Patient Centered Outcomes Research Fee, Transitional Reinsurance Program, Health Insurer Fee and the Risk Adjustment Program.
Because CBI is a relatively new company with less than a year of claims experience, the company based its claims cost projections on the “more complete and mature experience” of the off-exchange book of business of the ConnectiCare Insurance Company for the period of January 2013 through December 2013and paid through March 2014.
After an actuarial review, the Department determined that CBI’s pricing projection would meet the 80 percent medical loss ratio threshold. The Department actuary called the trend assumption of 3.84 percent “excessive” and, instead, determined that the revised 3.26 percent assumption was more reasonable.
The Department also concluded that because all Connecticut plans with the exception of grandfathered plans (those issued before March 23, 2010) will be ACA compliant on January 1, 2015, the plans are eligible for the federal temporary reinsurance program. Because other states have delayed the transition to fully ACA compliant plans until 2016, the Department believes that there should be excess federal funds available in the temporary reinsurance program that Connecticut carriers must apply toward their calculation to lower some of their pricing.
As a result of the actuarial review, the anticipated impact of the reinsurance program and other factors, the Department disapproved the revised 6.2 percent increase and instead, on July 29, 2014, reduced it to a 3.1 percent increase. The Department determined that the resulting rates relative to the benefits being offered are neither excessive, inadequate nor unfairly discriminatory.