The strange saga of ConnectiCare’s participation on the state’s insurance exchange is finally over, at least for now, but the cat and mouse game between the Farmington insurer and state insurance regulators has left in our minds more questions than answers.
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The strange saga of ConnectiCare's participation on the state's insurance exchange is finally over, at least for now, but the cat and mouse game between the Farmington insurer and state insurance regulators has left in our minds more questions than answers.
First, after ConnectiCare was adamant that the 17.4 percent average rate increase approved by the Connecticut Insurance Department was inadequate and would cause it to lose $20 million next year, why did the insurer have a sudden change of heart?
ConnectiCare went so far as to file a rare lawsuit against the Insurance Department accusing the agency of approving rates that would threaten its solvency, a significant charge against a government regulator whose responsibility is to safeguard the financial health of the industry.
Did the 17.4 percent rate hike suddenly make financial sense for the insurer? If so, how come? Or, is the company willing to take a loss to preserve competition on the exchange, which now only has two participants left (Anthem and ConnectiCare) after UnitedHealthcare and HealthyCT exited earlier this year?
ConnectiCare's exchange business was profitable in 2014 and 2015, earning the company $12.3 million and $13.6 million, respectively, according to ratings agency A.M. Best.
The carefully crafted public statements released at the end of this brief public spat didn't reveal much, but it is likely ConnectiCare faced some political pressure to stay on the exchange.
In a written statement, ConnectiCare President and CEO Michael Wise said: “After hearing from state officials, providers and beneficiaries about the importance of our plan to Connecticut, we have decided to move forward into 2017 as a plan on the exchange at the rates approved by the department.”
We may never know the full details of how this dispute played out, but at a time when Connecticut's small businesses and individuals continue to get crushed by ever-increasing health insurance costs (the average 2017 individual rate increase for health plans sold on and off the exchange is 24.88 percent, while small groups face a 12.88 percent average rate hike), the public's confidence in the entire rate-setting system won't be helped by this episode.
And it's very likely we haven't heard the end of the exchange's problems. After being hailed as a beacon for state insurance exchanges around the country, Access Health CT has lost half of its insurance participants, as carriers raise red flags about the financial viability of the products they are selling on the exchange.
The main conclusion that can be drawn is that unless changes are made to the Affordable Care Act on the federal level, the exchange will experience serious long-term survival challenges.
Gov. Dannel P. Malloy, an ardent exchange supporter, agrees with that analysis. Earlier this month, he sent a letter to Sylvia Burwell, secretary of the U.S. Department of Health and Human Services, raising concerns about the market volatility that has resulted from several federal policies, including the Federal Risk Adjustment Formula, which was the main factor that essentially forced Wallingford insurer HealthyCT out of business.
He also raised concerns about flaws in the rate-setting process and urged CMS to consider more flexible plan designs — something insurers have been encouraging for years — so more affordable insurance products can be sold on the exchange.
Admittedly, there is no silver bullet to providing more affordable healthcare coverage in Connecticut and around the country.
Some would argue that government should reduce or even eliminate its role in the system; others say government should completely take control of it.
What most people can agree on is the current system remains imperfect — as demonstrated by the problems facing Connecticut's own insurance exchange — and needs further reforms.
