‘No one answer’ to fund state reinsurance program

HARTFORD — Unable to figure out how best to fund a reinsurance program earlier this year, a bipartisan group of lawmakers continues to discuss the issue both publicly and privately.

After a panel discussion last week at the Legislative Office Building, Sen. Kevin Kelly, RStratford, who would prefer using state funds instead of a charge to carriers to fund a robust reinsurance program, said that there’s “no one answer to getting this right.”

He said the conversation that he helped convene around the issue of rising healthcare costs, including prescription drugs, needs to be “holistic,” and reinsurance is just a portion of the issue.

“I think we’ve gotten to a point here where the premium levels, the costsharing levels, are all unsustainable,” said Paul Lombardo, an actuary with the Connecticut Insurance Department. “I think we all recognize that. That’s why you’re here.”

But insurance carriers don’t want another assessment because they said it will only force them to increase premiums.

Neil Kelsey, vice president and chief actuary with ConnectiCare, said it comes down to the funding and how you’re going to pay for this.

“I do believe providers like hospitals have a stake in this as well,” he said.

Christine Capiello, senior director of government relations for Anthem Health Plans, said reinsurance that will help carriers offset the highest claims needs to be a broadbased assessment because if the carriers are asked to foot the bill, then it’s only going to increase premiums.

“It is a lot of money but that’s what helps promote the stability of the marketplace,” Capiello said.

Kelly believes Connecticut would need to take about $20 million from its budget to fund a meaningful reinsurance program.

Susan Halpin, executive director for the Connecticut Association of Health Plans, which lobbies on behalf of insurers, cautioned lawmakers about unintended consequences. She said they don’t want to find themselves in a situation where they are adding to the cost of the premiums.

Susan RichBye, general counsel for Access Health CT, reminded lawmakers that reinsurance is a costshifting mechanism “so you’re not getting at the underlying claims costs. You’re just moving around the money.”

That movement of money will help some people, but for a limited period of time.

Kelsey said the ACA has insulated consumers below 400% of the federal poverty level from large premium increases.

However, for anyone above a certain income level, insurance is becoming increasingly more expensive because they can’t access the tax credits.

“So a reinsurance program or anything that would lower rates 5 to 15% — that’s going to help that cohort of people,” Kelsey said. “That’s an important block of business because they’re being priced out today.”

Lawmakers have not settled on a path forward, but they are looking at various options.

“We want to get this right and we want to get this going for 2020,” said Rep. Sean Scanlon, DGuilford, who cochairs the Insurance and Real Estate Committee.

Lombardo warned that the reinsurance program the state had at the beginning of the ACA didn’t change the claim curve at all. If the state decides to apply for a federal reinsurance waiver, then “you’re not impacting the cost of a claim at all. You’re helping the individual market stabilize,” Lombardo said.

Insurance rates in Connecticut for 2020 went up, but not as much as the carriers requested.

This year, Anthem Health Plans, Inc. has asked for a 15.2% increase in individual health plans, mostly because of a 9.3% increase in medical cost trends and the reinstatement of the federally mandated health insurer tax. Anthem served approximately 21,900 members in Connecticut last year.

ConnectiCare Benefits, Inc., which serves about 75,600 consumers, proposed an average 4.9% increase in its rates. It also attributed the increase to a 9.3% increase in medical cost trends.

Regulators at the Department of Insurance approved an average increase for individual plans of 3.65%, significantly less than the average request of 7.78%. The average increase for small group plans will be 9.19%, which DOI reduced from an average request of 11.98%.

Health insurance plans for 2020 are being sold through Dec. 15.

“So a reinsurance program or anything that would lower rates 5 to 15% — that’s going to help that cohort of people.” Neil Kelsey, vice president and chief actuary with ConnectiCare