Insurance Committee Amends Exchange Bill With One-Year Delay
The Insurance and Real Estate Committee removed the teeth from a bill Tuesday that would have directed Connecticut’s insurance exchange to actively negotiate with insurance carriers to lower the cost of monthly insurance premiums.
The amendment proposed by state Rep. Rob Sampson, R-Wolcott, delayed the requirement that the insurance exchange negotiate with carriers for one year and made it permissive, instead of mandatory. The amendment was adopted on a voice vote and became part of the bill, which was later approved by the committee.
There’s been an ongoing controversy over whether forcing the exchange to negotiate with carriers would actually result in lower rates for customers. Advocates believe the six states that actively negotiate do much better than states that don’t, but some lawmakers believe there’s enough checks and balances in place with the scrutiny of the actuaries at the state Insurance Department.
Sampson said the exchange already has great authority over who can participate in the exchange and the Insurance Department did a good job of getting the rates lowered during the first year of the exchange. He said he understands the desire of advocates to reduce the monthly premiums, but doesn’t believe forcing the exchange to negotiate will yield better results.
“The question is where do those insurance premiums come from and how will this actually impact those premiums?” Sampson said. “I would argue the cost of insurance is most affected by the cost of healthcare, which this has no effect on whatsoever.”
In September, the White House released a report that showed Connecticut will have the 4th highest premiums in the country.
Access Health CT CEO Kevin Counihan has said that might have something to do with the fact that Connecticut “currently has the 4th highest medical costs in the U.S.” However, advocates say some is attributed to the decision not to negotiate with insurance carriers.
Ellen Andrews, executive director of the CT Health Policy Project, said she was very disappointed in the committee’s decision Tuesday to change the bill.
“It sends a strong signal to the HMO’s—Don’t worry nobody’s going to be trying to get your premiums down,” Andrews said in a phone interview.
Negotiating with the carriers “just makes sense,” she said. “Understandably, HMOs don’t want that happening.”
Under the amended bill, the Connecticut insurance exchange, is not required to negotiate, but Rep. Robert Megna, D-New Haven, said the exchange can decide to negotiate if that’s what it wants to do.
“In the past the exchange has expressed concerns about this bill when it was in front of the committee last year,” Megna said.
This year Access Health CT did not submit any written testimony or take a position on the bill. The Access Health CT Board of directors voted against the idea of negotiating with insurance carriers back in November 2012.
The amended bill wouldn’t impact the rate setting process for 2015 and Megna said he doesn’t know why anyone would want to “throw a wrench in the process” at this point.
But what Megna considers a wrench, advocates considered a negotiating a tool to help improve competition in the marketplace.
“What’s wrong with getting a better deal?” Andrews asked.
But the state Insurance Department called the original bill “unnecessary.”
“The existing premium rate review and approval process through the Connecticut Insurance Department has been successful and is working well. It is the Department’s position that no change is needed at this time,” the Insurance Department wrote in its testimony to the committee.
Keith Stover, a lobbyist for the Connecticut Association of Health Plans, said that the original bill was “without question a solution in search of a problem.”
He said with the medical loss ratios being regulated there’s no extras being added to the cost of a monthly premium. He said insurance carriers are working every day to lower medical costs by aligning provider networks and numerous other things to lower the cost of medical care.
“There are constant negotiations,” Stover said. “Every insurer is trying to figure out the secret sauce of how do you crank down costs.”
Rep. Mike Alberts, R-Woodstock , said the original bill was “like asking for the largest hot fudge sundae you can get that’s going to be free and without calories.”
He said his concern was that they’ve not setting up two systems of rate setting. The Insurance Department’s actuaries are required to look at the rates submitted by all the carriers.