Challenging Health Insurance Premium Rate Increases: Part 1 – Preparing for Rate Review in 5 Steps

This is the first blog in our series that shares tips and best practices from consumer advocates in several states about how to effectively participate in the health insurance rate review process. The rest of the series covers: 

Part 2: First steps for advocates after rate increases are proposed 
Part 3: How to critique insurers’ assumptions about future medical costs 
Part 4: Challenging the amounts insurers keep on hand for administrative expenses, reserves, and surpluses
Part 5: Involving consumers in the rate review process

This blog covers what rate review is, how it affects the affordability of health coverage under the Affordable Care Act, the role health care advocates and consumers can play in the process of reviewing the premium rate increases that health insurance companies propose each year, and—most importantly—what advocates and consumers can do now to prepare for the numerous state rate review public comment periods that are coming up in May, June, and beyond. 

With a significant part of the expansion of health coverage under the Affordable Care Act relying on the private insurance market, it is critical that health care advocates use every tool to strengthen, defend, and preserve the affordability of private health insurance plans. Rate review is a tool that advocates can use to do just that—it is a process that allows consumers to comment on the increases in premiums that a health insurance company is proposing. These comments can have a real effect in keeping premium costs in check. In Colorado, the Colorado Consumer Health Initiative notes that rate review saved consumers as much as $32 million in one year. And in Oregon, OSPIRG estimatesthat rate review cut at least $69 million from 2014 premiums.

In the next few months, health insurance companies will be notifying state health insurance commissioners of their planned health insurance premium rates (known as “rate review filings”) for 2015. Because these rate review filings will peak in May and June, advocates and consumers should start preparing now by learning how the rate review process works in their states.

This month, Families USA surveyed eight seasoned state advocates to get their perspectives on what worked best for them as they prepared for rate review in their states. Though each state’s process is different (the power to reject rate increases varies by state), we learned from interviews with advocates in Colorado, Connecticut, Maine, Massachusetts, New York, Oregon, Vermont, and Washington, D.C., that there are best practices that all advocates and consumers can follow.

What you’ll learn from this first post: Prepare now for effective rate review comments later

In this first post for our new blog series on health insurance rate review best practices, we’ll walk you through five things that you can do to prepare for the comment period on rate filings once they are posted. You’ll learn how to get up to speed on how the rate review process works, how to arrange meetings with your state’s insurance commissioner, which rate review information to look for on your state’s insurance website (and when), and how to share what you’ve learned with others in your advocacy network.

Take these five steps to prepare for health insurance rate review filings in your state

Step 1. Arrange to meet with your state’s insurance commissioner, either in person or by phone. Bring other consumer organizations to the meeting.  By arranging a meeting, you are signaling to the commissioner that health consumers care about premium increases, and that you are learning about how to effectively challenge unfair rate increases. If your commissioner indicates that he or she lacks the power to stop unreasonable increases, use that as an opportunity to see how your state’s procedures, rules, or laws should be changed.

If your state runs its own health insurance marketplace, meet with the board or administrators of the marketplace to find out more about:

• How the board or administrators will hold down premium rates for next year
• What the process is for consumers to comment on the prices of marketplace plans
• Whether the marketplace will exclude plans or negotiate with plans whose rates are not reasonable

Tip: To make the most of your appointment, first research steps 2-4 in this post. The insurance department’s website can be a good source of many of those answers.

Step 2. Find out how your state notifies the public about rate increase filings. Only a few states (such as Maine and New York) require insurers to give health plan enrollees notice when the insurer requests a rate increase (here is a sample rate increase letter from Aetna to its members in New York).  In Colorado, Oregon and Vermont, you will be able to opt in to receiving notification of rate increases via the state website (here is Colorado’s website as an example). In most other states, you will need to regularly review the state insurance website to see companies’ proposed premium rates. The prominence and user-friendliness of that information will vary from state to state. At your meeting with your insurance commissioner, you can also ask about the schedule for plans to submit proposed rate increases and about when the public will be able to review those submissions.

Step 3.  Find out how your state regulator’s website provides information on proposed rate increases. Many states have websites that do a good job of providing user-friendly information on rate reviews. Oregon was the first to do so, and several other states have used federal grants to improve their websites. Usually, it is the insurance department that posts that information, but it might be posted by a different regulatory agency in your state: for instance, in Vermont, the Green Mountain Care Board posts information. Here, we take a look at how Vermont uses best practices to provide information about rate reviews and public comments in a transparent and user-friendly manner.

Case study: Vermont’s Green Mountain Care Board website presents user-friendly information on health insurance rate filings

Description of the rate review process. Vermont’s site includes a general description of each step in the rate review process. Here, consumers learn how to weigh in and when decisions about a proposed rate will be made.

Information about proposed rate increases (SERFF filing). For each proposed rate, the website includes a description of the rate review process and a quick summary of what is being proposed (for example, an increase of a particular percent in its base health insurance premium rates).

Vermont’s site features a SERFF filing (System for Electronic Rate and Form Filing), which lists how much the insurer collected in premiums over the course of the previous year, how much it paid out in medical expenses, and why it is requesting an increase in premiums for the coming year.

Look for this SERFF document, or similar information, in your state.  Under federal rules, for proposed rate increases exceeding 10 percent, insurers are required to post a public summary of their justification for the rate increase. And in many states, more information must be made public about all proposed rate increases (more on that in a future post in this series).

Insurer’s reasoning and predictions of future expenses (actuarial memorandum).Vermont also posts an actuarial memorandum, furnished by the insurer, that explains the insurance company’s reasoning for the increase and predictions for future expenses. As the review of the rate proposal proceeds, more information is posted to the Vermont site, including a list of who will appear at rate review hearings. The state also posts its actuarial analysis of the insurer’s proposal. This analysis explains if Vermont agrees with the insurer’s assumptions about which medical expenses it will pay in the future and shows Vermont’s calculations. Consumers can comment during the review process.

Step 4. Learn how and when you will be able to comment on a proposed rate increase. For consumers, filing comments can be as simple as filling out an online form, sending a letter to the insurance department, or speaking in a public hearing or meeting to explain why a proposed rate increase is unfair, unaffordable, or may cause consumers to drop coverage. This tactic can be effective if a significant number of a plan’s consumers submit a letter or online form commenting against a rate increase. However, advocates and organizations should consider taking a more nuanced look at rate increases. Our section on How to craft more complex comments on rate increases, covers this.

Before you start, find out if there is a particular format that you need to follow or information that you’ll need to include (e.g., a reference number), and be sure to include that information in your letter or form.

Step 5. Share what you learned with your network. Share what you learned with the groups in your network (social media can also be a good tool for quickly broadcasting tips and lessons learned) to broaden your reach and to help others capitalize on what you have learned.

• Community Service Society of New York , through its Small Business Assistance Program, makes presentations to individual consumers and the small business community explaining how they can comment if “insurance costs are too damn high.”
• New York’s Health Care For All New York Coalition posted this on their blog when 2011 health insurance premium rate increases were posted, and posted this when they had comments to share.

How public comments can affect health insurance rate increases

Even very simple comments can make a big difference in a rate hearing. For example, an insurance commissioner and insurer are likely to have second thoughts about a proposed rate increase if many consumers say it would cause them to drop out of the plan. Last year, 43 states told HHS that they provided an opportunity to receive public comments on proposed rate increases for individual and small group health insurance, or at least on increases in base premium rates that were more than 10 percent. In states that did not receive comments or scrutinize rates for the individual or small group market or for association health plans, consumers could comment to HHS if a proposed increase exceeded 10 percent.

Last year, HHS posted summaries of insurers’ justifications for their proposed rate increases and allowed the public to submit comments on proposed rates. To date, HHS has not yet posted its rate review process for 2014, and consumer organizations are actively calling for HHS to make more information about proposed rates public. (To access the sign-on letter to HHS, contact Consumers Union’s Betsy Imholz at imhobe@consumer.org.)

How to craft more complex comments on rate increases

For consumers, an online form or a letter is a great place to start. But if you are an advocate or an organization with resources that allow you to delve into the issue further, you can write more sophisticated comments. You can look at the insurer’s justification for its rate increase and challenge its assumptions.  Some community organizations have partnered with lawyers and actuaries to make their case. (Contact us at stateside@familiesusa.org if you need more information about this.) In fact, some states, including Oregon and Vermont, designate and fund health care advocacy organizations to represent consumers in rate filings (OSPIRG, and Vermont Legal Aid’s Office of Health Care Advocate, respectively). In Connecticut, the state’s Office of the HealthCare Advocate also represents consumers in rate filings. And some organizations, like Consumers for Affordable Health Care in Maine, also scrutinize insurers’ annual statements and have succeeded in reducing rate increases that would increase health insurers’ profits.

What you learn about rate review can help other advocates—share your strategies with us on Twitter and Facebook

If you have tips or best practices to share, other advocates are waiting to hear from you! Please share your strategies with us through Facebook or Twitter using #ratereview2015.