Opinion: Limiting increases in health insurance rates is not the answer

Recently, the state Department of Insurance announced some good news: the rate increases requested by nine Connecticut insurance companies for the upcoming year were reduced from 25% to 50%.

The bad news? Insurance rates for 2024 remain elevated for 188,000 Connecticut residents. Cutting the scale of an increase is still an increase.

We believe there is a better way for insurance companies to control their costs, and we believe there is a better way for the state Department of Insurance to work with insurance company executives on claims raise their huge interest rates before granting them even a fraction of what they desire. The ultimate beneficiary of this rewrite of the rules will be you, the insurance customer.

Let’s take a look back at how this year’s process went.

In August, the Insurance Department held a hearing on the rate proposals of nine insurance companies. Their testimony did not provide any compelling reasons for raising rates, their demands exceeded both inflation and medical inflation rates, and they had no idea how to control spending fees, in addition to making it more difficult for their customers to obtain “prior authorization” for certain medical procedures.

A few weeks later, when questioned at a public hearing about the proposed rate increase, insurance executives couldn’t explain why things had gotten so expensive. For example, do they negotiate individual medical procedure costs with hospitals? No, they haven’t thought about that.

So how can we rewrite the rules and prevent annual premium increases? Here are a few ideas for the next legislative session:

1) Treat health insurance companies like electric companies. Currently, Connecticut power companies are reviewing their rates under a process called the “Uniform Administrative Procedure Act.” It is a rigorous process that requires evidence and cross-examination during rate hearings. Health insurance companies don’t have to go through that. They should.

2) Require the insurance commissioner to consider affordability when approving any rate. A “rejection presumption” is required for any interest rate claim above inflation.

3) Make it clear that not only do insurers have a “fiduciary responsibility” to get the best prices for their customers, but the insurer’s pharmacy benefits manager also has a responsibility entrust to get the best price. PBMs are third-party companies that act as intermediaries for the insurance company they work for and for a pharmaceutical company. The three largest insurance companies in the US and their PBMs Express Scripts, CVS Caremark and OptumRx control about 90% of the US prescription drug market, serving 270 million people.

4) Require insurance companies to negotiate step by step with hospitals regarding various procedures. In 2014, Connecticut passed a law requiring hospitals in workers’ compensation cases to charge Medicare-based rates for surgeries rather than hospital “list” rates. Suddenly the cost of a shoulder surgery dropped from $44,000 to $14,000, saving Connecticut businesses hundreds of millions of dollars in workers’ compensation insurance premiums. Why can’t health insurance companies do the same for their customers?

5) Amend Connecticut’s Certificate of Need law to apply to insurance giants buying private physician practices. Currently, state oversight focuses on hospitals, but in recent years, insurance companies and even Amazon have begun buying up medical practices. Often, these acquisitions increase costs but do nothing to improve the quality of care. That needs to change.

6) Connecticut should also be the first state in the nation to enact “site-neutral payment reform” for certain medical procedures that can be performed in an outpatient facility. According to this proposal, the cost of a procedure does not vary according to the site owner. Congress has considered this for Medicare patients.

Finally, let’s briefly consider something that should not be an option: the Republican Party’s push for so-called “reinsurance.” Reinsurance is a program designed to benefit insurance companies; it protects them from paying high-cost claims, which in turn can reduce premiums for wealthy people who don’t qualify for premium subsidies. Reinsurance does nothing to address high health care costs.

Another problematic proposal would allow “association health plans,” which are not traditional insurance but a product called a “multiemployer benefit arrangement.” These products often provide inadequate coverage, fail to address health care costs, and discriminate against people with pre-existing conditions.

We have outlined several proposals that we believe could reduce health insurance premiums and limit the annual rate increases that continue to be approved in Connecticut. We are no longer at a point where we can only shave a few percentage points off insurance company rate increases; we need a whole new set of rules. 2024 could be a game-changing year.

State Senator MartinM. Looney is Senate president and Sen. Jorge Cabrera is Senate chairman of the Insurance and Real Estate Committee.

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