How to Challenge Proposed Health Insurance Premium Rates for 2016

As of June 19, most insurers’ proposed premium rates for 2016 were posted on federal and state regulators’ websites (except for California’s rates, which will be posted in late July). Proposed rates must be posted for review if increases are 10 percent or more, but a few states post all proposed rates for review. With some insurers proposing rate increases of up to 40 percent, consumer and advocate participation in the rate review process this year is critical.

This blog explains what advocates and health care consumers should know about how rate review will be different this year.

Groups should find out whether 2016 premium increases are justified and push back if they are not.

Companion Blog: Observations on Proposed Health Insurance Premium Rates for 2016

The “insurer’s justifications for a rate increase” are posted on ratereview.healthcare.gov. Insurers that have proposed the highest rate increases claim that they underpriced their plans for 2015 because they did not know how much care new enrollees would need. Now that they have had a year of experience, they argue that their rate increases merely reflect the necessity of adjusting their rates to be more in line with the amount of care that enrollees actually do need.

When looking at proposed rates on ratereview.healthcare.gov, there is summary information about why the insurer is requesting an increase, a link to portions of the insurer’s “actuarial memorandum” that provides more information about the insurer’s cost forecasts, and a link where advocates and consumers can file comments.

Questions consumer advocates can ask in their comments to insurance regulators to help determine whether insurers’ proposed rates are justified

• How are insurers predicting enrollees’ costs for 2016? Many new enrollees were uninsured before they finally got coverage in 2014, so it is not surprising that they got care that they had previously postponed. The cost of that care may have been beyond what their insurance company had anticipated when it calculated premium rates, and insurers that had higher-cost enrollees have now been compensated for unexpected costs through risk adjustment and reinsurance. But that doesn’t necessarily mean that enrollees will continue using the same amount of health care services in the future—or that insurers should raise their rates based on old assumptions.A study of new ACA enrollees in Kansas by the Society of Actuaries found that enrollees did indeed use more services in early 2014 than people who were already enrolled. But the study concluded that additional research is needed to see if service use tapers off, as has been the case for new Medicaid enrollees.
• What is the insurer predicting about the health care costs of new enrollees? People who badly needed medical care likely enrolled the first year that coverage was available to those with pre-existing conditions (for adults, this was 2014; for children, it was 2010). But by 2016, new enrollees will include healthier people, such as young adults who are buying their own coverage for the first time because they turned 26 and lost their parents’ coverage, as well as people who enrolled because of the higher individual responsibility payments for remaining uninsured.So, are insurers predicting lower costs for these new, healthier enrollees and working to bring these people into their plans? Not necessarily. Some insurers have not factored lower costs for new, healthier enrollees into their rate proposals, which is something that consumers and regulators can check. Here are a couple of examples where regulators and advocates looked into insurers’ forecasts of enrollee health costs.
  • The Maryland Women’s Coalition, with expert assistance from Jay Angoff (former Director of the HHS Office of Consumer Information and Insurance Oversight, now with the law firm of Mehri & Skalet), has examined these issues in comments they submitted on a proposed rate increase in Maryland. In this case, consumer groups disagreed with the insurer’s forecast of enrollees’ costs.
  • In Vermont, Blue Cross Blue Shield is setting a good example by explaining that it expects 2016 enrollees to be “significantly healthier on average than those who enrolled in 2014.”
• How are in​surers estimating the changes in medical costs (or “medical trend”) that they will use for calculating premiums? The “insurer’s justifications for a rate increase” that are posted on ratereview.healthcare.gov often include a summary of how much the insurer expects the costs of various services to increase. Advocates can see whether the medical cost increases projected by any insurer in their state look very high compared to what other insurers are projecting.  If those projections do look too high, advocates can question the resulting rates.
• What is the insurance company doing to control health care costs and to pass those savings on to consumers? For example, does the insurer use “value-based payments” to give providers incentives to deliver high-quality care at lower costs? Some payment models reward providers for delivering high-quality, cost-effective care or penalize providers for delivering poor-quality or unsafe care.
• If an insurer does need to raise its rates, can it do so gradually instead of all at once? Raising premiums a lot all at once can cause consumers to drop coverage, and people who are healthy are more likely to drop out than people who are sicker. This will only exacerbate cost problems for the insurer.To mitigate this problem, an insurer that has lots of surplus may be able to use some of its resources to moderate price increases in 2016, for example.

Additional resources for advocates

Advocates who want to comment on proposed rates but don’t have experience doing so may want to look at comments submitted by OSPIRG, the Oregon State Public Interest Research Group. This group has substantial experience with commenting on proposed rates and bringing down costs for consumers. Their comments to the Oregon regulatorthis year talk about the kinds of issues discussed above.

Comments from individual consumers can make a difference too. A fact sheet from Health Care for All New York about filings in New York includes three points that consumers can make when commenting on proposed rates.

Some states still lack strong rate review laws. In these states, insurers can withhold important information about their rate proposals from the public, and regulators do not have the authority to reject unreasonable premium rates. Advocates in those states should take this opportunity to press for stronger rate review laws.

For more resources on rate review, see our short analysis, Rate Review: How to Challenge Unreasonable Health Insurance Premium Increases.