Recently a Missouri small businesswomen called our office to report that the same health insurer that provided her coverage under a small group policy last year for about $420 per month, was quoting her anywhere from $1500 to $2000 for her coverage in an individual policy. That’s four to five times what she had been paying for similar benefits, with no change in her health status and no “pre-existing condition” except that she is a woman who is at the age of menopause.
It surprises many Missourians that these types of rates and rate increases are not approved by, reviewed by, nor even seen by, the regulator of insurance in our state, the Missouri Department of Insurance, Financial Institutions, and Professional Regulation (DIFP). Missouri is one of only two states in the country where the legislature has chosen to let the free market be the only regulator of health insurance rates for our citizens. As a recent candidate for national office often says: “how’s that working for ya?” “Not very well” would be our answer.
Because Missouri DIFP does not receive rate filings from health insurers doing business in our state, it is difficult to get data about Missouri health insurance premium rates, but some national studies support the anecdotal stories we often hear from our friends and neighbors here. A June, 2010, survey by the Kaiser Family Foundation found that 77% of people purchasing insurance on the individual marketplace were being told by their insurers that they would be charged at least a 20% increase in premium for the same coverage this year.
Kaiser also reported in a study on Employer Health Benefits in 2009, that from 1999 to 2009, premiums more than doubled (an increase of $7500) for the average family receiving health insurance through an employer. And this doubling of increases occurred while wages and cost of living grew at much slower rates. These types of premium increases have an impact on families, businesses, and our economy.
Many Missourians experience similar rate increases as they move from group coverage to the individual market, even though their health conditions have not changed. And, many Missourians often experience significant rate increases from year to year even when they remain in small group plans, or individual plans.
The good news is that some help may be on the way. The Affordable Care Act which was signed into law in March 2010 seeks to help with the rising cost of health insurance in several ways, including providing for a review of certain premium increases, setting standards for the amount of premium that must be spent by insurers on benefits versus overhead (called the medical loss ratio), and posting of prices for transparency. The new law also provides for tax credits for small businesses which provide coverage for their employees, early retiree reinsurance programs, and premium assistance for some American families.
In September of this year, the Department of Health and Human Services (HHS) announced that it will begin to implement the rate review portions of the new law. In states with adequate rate review processes in place, the state will do the reviews. Since Missouri does not give DIFP rate review authority, HHS will do the reviews for our state. HHS will do this by reviewing any proposed premium increase in the small group or individual market of over 10% on average by an insurer. The insurer will be required to provide paperwork with its justification for the increase to HHS and HHS will post the information on its website. If HHS determines that the rate increase is unreasonable and the insurer decides to go forward with the rate increase anyway, the insurer must post that determination on its own website and HHS will post the determination on its website, too. Consumers can take a look at a prototype of the website postings at www.healthcare.gov/ratereview09012011a.html.
HHS does not have authority to disapprove the rate increases that it determines to be unreasonable. But, for some insurers, just that determination may have them reduce the increase. And, for consumers and small businesses, the transparency this provides can inform our purchasing decisions.
For Missouri consumers, this step is just a beginning. Bills have been filed and heard in the Missouri General Assembly which would give DIFP more rate review authority in the future. Our state legislators could consider at least allowing DIFP to obtain filings from insurers looking to increase rates, or Missouri could put in place a strong regulatory system like that of Oregon and other states. Recently Regence Blue Cross Blue Shield sought approval in Oregon for a 22% rate increase in its individual policies (non-group). The Oregon Department of Insurance has authority under its state laws to not only review, but to approve rate increases. The department looked at the documents filed by the insurer, evaluated the request and approved only a 12.8% increase. This saved some 60,000 Oregonians money on their health care policies.
Don’t Missouri families deserve the same kind of protection? It is time we acknowledge that a completely free market system in health insurance rates has not worked for our citizens and small businesses. Rate review reforms can help put individual consumers and small businesses on the same playing field as large employers when it comes to health insurance rates, strengthening our negotiation position as we purchase insurance.
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