Rate request: Average increase of 12.5 percent
Decision: Disapproved on July 25. The Department requires the carrier to submit a recalculated rate by August 31.
On May 30, 2014, Anthem Health Plans, Inc. filed a rate request for an average 12.5 percent increase on individual health plans marketed on and off the state’s health insurance exchange beginning January 1, 2015. The company reported that the proposed rate change would affect approximately 66,200 policies.
The company reported that the plans marketed through Access Health CT meet all the Essential Health Benefits criteria mandated under the federal health care reform law.
Anthem also said the rates also take into account other mandates related to the federal law such as guaranteed issue and new ratings rules, minimum actuarial value of 60 percent and taxes and fees.
In its initial filing, the company projected that costs of medical services and demand for those services, known as “trend” will account for an 8.4 percent impact over the current rates. The company anticipated a “pent-up” demand for health services in 2015, the second full year of the Affordable Care Act, and higher morbidity – the influx of previously uninsured into insured risk pools. The morbidity adjustment, the company filed, is based on “a CDC study on the health status and life styles of both currently insured and uninsured populations.”
The company also noted that other factors affecting rates are taxes and fees, changes in benefit design, particularly on the pharmacy side. Anthem is accounting for 100 percent coverage of benefits for specific over-the-counter drugs obtained with a doctor’s prescription. Projections also include the estimated costs during 2014 and 2015 of the drug Sovaldi and other high-cost drugs to treat Hepatitis C.
The Department held a Public Hearing
on June 27, 2014 on this specific filing. On July 25, Commissioner Thomas B. Leonardi disapproved the rate request as submitted based on the actuarial review and recommendations of Hearing Officer Paul Lombardo.
The Department determined that the initial rate request was excessive and disagreed with a number of Anthem’s pricing factors, including “trend,” which the Department concluded should be lowered from 8.42 percent to 7.67 percent.
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 can apply to lower some of their pricing.
As a result, the Commissioner has directed Anthem to submit revised rates by recalculating the impact of the various pricing factors, which the Department’s actuarial review concluded were lower than the carrier’s projections. The revisions must be resubmitted to the Department no later than August 31, 2014.