Consumers were shocked when insurance giant WellPoint hiked rates in Colorado this year on its Anthem Blue Cross Blue Shield individual-market policies by more than 20 percent. More shocking, perhaps, is that those rates may be perfectly in line, given the way medical prices are rising, according to consumer advocates. State regulators say Coloradans won’t learn whether the rates were fair or not, much less win relief, for months or longer.
WellPoint sent in its request for the 19.9 percent rate increase in September and by the late fall and winter, as customers received news, complaints began to arrive at the state’s Department of Regulatory Agencies Division of Insurance. After the rates kicked in at the turn of the year, complaints picked up and the Division decided to submit the hike to a second review.
According to Division Spokeswoman Cameron Lewis, that assessment is due to be completed on time in the next week or so. It will be sent to WellPoint for review. WellPoint will then send back its response to the state, arguing against the finding or conceding to it. The state then reviews that response. “In other words,” Lewis told the Independent, “We’re looking at a period of up to 60 days after we file the first review. It could be less than that but until the report goes back and forth we’re required by law to keep the findings confidential.”
In March, the Colorado Independent reported that Tom Abel, supervisor of the Rates and Forms section at the Division, signed off on the hike in September as part of what seemed a cursory process.
“An actuary looked over the paperwork and one of our analysts. Then I signed off on it,” Abel said. He wasn’t surprised at the proposal. “Large increases have been more common in the last few years.”
Turns out, the fact that there was an initial review at all was notable. Many states gave up the right to review rate hikes in the 1990s as part of a Reagan-inspired move toward deregulation across industries. Due to consumer advocacy, Colorado retained that review authority. What’s more, consumers have good reason to believe the second review wrapping up now will be rigorous.
Dede de Percin, executive director of the Colorado Consumer Health Initiative, explained that regulators here can be “cursory” on initial review because the state requires insurance corporations to submit reams of paperwork to back up requested rate hikes. Again, that’s not the case elsewhere, as in states like California, which is presently waging a contentious legal battle with WellPoint. If customers complain in Colorado, or if something seems off after the initial review, regulators turn to all of that paperwork.
“It’s a lot of information. Colorado actually has a rigorous review policy,” said de Percin. “This rate hike sounds outrageous and it is outrageous but it’s probably not a case of gouging. That’s the thing. That’s the real story. The rising cost of health care.”
De Percin is a longtime health insurance watcher and she helped advocate for the regulatory review process in Colorado. She reiterates that the story at the heart of health reform was always the rising costs of care, of checkups, medicine, procedures. All the talk of abortion and government takeovers was a distraction from the need to restrain those costs. Double digit increases, she says, will be the new norm, which is clearly unsustainable.
“Cost containment is simply the thing. Last year the trend in health insurance expenses was 12 percent,” she said, referring to the money corporations like WellPoint are spending on actual health care for patients. “So in Colorado the rate hike was 20 percent. That’s only 8 percent over cost [for Wellpoint]. That doesn’t seem crazy given their administrative costs. We’ll see what the regulators say.”
De Percin said she believes there should be a state and consumer review board for health insurance, like those established for example to examine proposed utility rate hikes.
According to a report by the Center for American Progress, WellPoint has raised rates by double digits in at least eleven states this year, drawing reviews and legal fire.
California has been the site of the most heated back and forth. Lawmakers outraged by a proposed 39.9 percent increase, subpoenaed WellPoint financial records as well as records from Aetna and Cigna as part of an investigation into complaints that the insurers were denying 40 percent of patient claims.
WellPoint CEO Angela Braly answered that the rate increase was driven by soaring health care costs and the fact that healthy people paying into the system were dropping their coverage in the recession.
A 2009 New York Insurance Department report details the way insurers take advantage of deregulation there, fudging data to hide profits when filing rate increases with the state. Insurers, for example, routinely delay refunds, manipulate loss ratios, under-report excessive premium rates and price themselves out of unattractive policy markets.
Bills proposed this year in the Colorado legislature have focused on eliminating gender discrimination on the individual market and requiring that insurers like WellPoint include maternity coverage for the state’s growing number of women un-enrolled in group plans, who presently have almost no access to maternity and contraceptive coverage. The gender equality bill has passed.
There are no insurance rate-hike review bills presently in the docket.