Officials at the National Association of Insurance Commissioners say details about association and out-of-state trust health plan rate review programs are hard to get.
The officials have sent the comments to the U.S. Department of Health and Human Services (HHS) in response to a section in a health insurance rate review regulation published in May.
HHS developed the regulation to implement the Patient Protection and Affordable Care Act of 2010 (PPACA).
In the regulation, HHS officials asked for comments on how associations should be treated in health rate reviews.
Some business groups and insurance producer groups have suggested in recent years that expanding access to national or multi-state association health plans could help hold down coverage costs.
But NAIC officials report that, when they set about answering the HHS questions about association and out-of-state trust plans, their sources of information were relatively meager.
NAIC President Susan Voss and the other NAIC officers and committee chairs who signed the letter say they relied on their own experience, interviews with representatives from 6 health insurers that sell coverage through associations and out-of-state trusts, and responses from 31 states to a survey conducted by Washington state insurance regulators in November 2010.
“HHS may want to collect additional information directly from the organizations that sell this coverage and from the insured persons who have purchased the coverage before making a final determination of how the rate review requirements in the Affordable Care Act apply to this type of medical coverage,” officials say.
Only about 10 states could come up with reasonably firm estimates of the percentage of residents who have individual, family or group association coverage. Answers ranged from 1% to 66% for small group coverage and 1% to 72% for individual coverage. The states that used more formal methods to come up with association plan penetration figures reported much higher percentages than the other states.
The NAIC officials also had a tough time answering HHS questions about how rate increases compare at association plans and traditional market plans.
“Most states were unable to answer these questions,” NAIC officials say.
The 3 states that took a stab at the question suggested that increases at association plans tend to be similar to the increases at the smaller carriers that insure the association plans. “Smaller carriers tend to have higher rate increases than the market average so the overall rate increases for associations tend to be higher than the market average,” officials say.
NAIC officials note that prices at association plans may be structured differently than at traditional market plans.
Producer commissions tend to average between 3% and 10% of premiums, but some associations cut the commission costs, and even generate royalty revenue, by helping to market the coverage through mass marketing vehicles, officials say.
Some associations can charge higher dues because they offer health coverage, and “those dues do not appear on the records of the insurer,” officials say.
The NAIC officials recommend that any rate review requirements that apply to ordinary individual and family coverage should also apply to association and trust coverage underwritten at the individual or family level.
Similarly, officials say, rate review requirements that apply to ordinary small group coverage should apply to every block of association or trust business that covers small groups.