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PPACA: States Reject Increase Requests

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Insurance regulators in Connecticut and Washington state have rejected health insurance rate increase requests filed by carriers doing business in their states.

Barbara Spear, the acting insurance commissioner in Connecticut, found the current premium rates set for grandfathered individual direct pay plans by a unit of WellPoint Inc., Indianapolis (NYSE:WLP), to be “actuarially sound” and “not excessive,” but she found a request for a 19.9% increase for the products, including BlueCare HMO, Lumenos and Tonik, to be “excessive.” She disapproved the application for the increase.

The disapproval will affect rates for about 48,000 enrollees, Spear estimates in her ruling.

The WellPoint unit, Anthem, testified that health care costs were going up, that enrollees PPACA compasswere using more services and that, because of economic downturn “some younger, healthier members have dropped coverage.”

But Anthem noted that the trend for its high-profile Tonik plan for “young invincibles” is negative 0.2%.

Spear says she rejected the application partly because Anthem provided aggregated data, did not file discreet rate requests for each product, and used a medical cost increase trend rate that seemed to be too high.

Connecticut regulators believe the actual medical trend supports holding the individual rates steady, not increasing them, Spear says.

In Washington state, Washington Insurance Commissioner Mike Kreidler rejected an increase request of 3.7% for one plan operated by Regence, Seattle, and a 4.9% increase request for another plan.

Regence already had received approval for rate increases in October. In the new application, it was asking for permission to replace the plans and increase rates again at the same time, Kreidler says in a statement about his decision to reject the increase filings.

In most cases, Washington state law lets carriers file only one rate change for an

individual health plan per year, Kreidler says.

“We have serious concerns with the rate change Regence proposed for covering new benefits for kids and the calculations it made for its replacement plans,” Kreidler says. “I’m committed to working with the company to see that its product is available to the public, but it must be fairly priced.”

Nancy-Ann DeParle, the director of the White House Office of Health Reform, says in a White House blog post that the Affordable Care Act- the package that includes the Patient Protection and Affordable Care Act (PPACA) — includes $250 million in grants to help states expand health insurance premium review programs.

Premium reviews already have helped avert some rate hikes in states such as California and Connecticut, “and we expect to hear more good news from other states in the months ahead,” DeParle says.

The rating agencies also have taken note of federal efforts to rein in increases in health insurance premiums. Moody’s Investors Service, New York, recently described new federal regulations that seek to hold down rates by setting minimum ratios of medical costs to premium revenue as a “credit negative” for U.S. health insurers.

“We believe these requirements will erode earnings and, in some circumstances, prompt insurers to exit certain markets,” Moody’s analysts say in a recent comment.


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