Health Insurers Agree to End “Secrecy” Insurers with 85% of market agree to make rate increase requests public

Benjamin M. Lawsky, Superintendent of the Department of Financial Services, announced that Aetna Health, EmblemHealth, Empire HealthChoice, Excellus Health Plan and HealthNow joined UnitedHealth Group in agreeing to end the secrecy over requests for increased health insurance rates. After the Department recently notified health insurers that it planned to make the rate increase filings public, ten health insurers and an industry organization all had filed formal legal objections.

Following the lead of United Health, Aetna, EmblemHealth, which also does business in New York as GHI and HIP, Empire HealthChoice, which does business as Empire Blue Cross, Excellus and HealthNow formally withdrew their objections and agreed with the Superintendent that rate filings should be made public. As a result, six large health insurers—including the five largest—with 85 percent of the prior approval segment of the market covering 2.4 million New Yorkers have now taken a position in favor of full disclosure.

Under a law passed in 2010, insurers are now required to seek the prior approval of the Department of Financial Services for certain health insurance rate increases for individuals, small groups and some large groups. So far, for contracts that start on or after January 1, 2012, health insurers requested weighted average increases of 12.7% and the Department granted increases of only 8.2 percent, below the expected increase in medical costs. The lower increase will save consumers more than $400 million in 2012.

The insurers support their rate requests with substantial detailed supporting data. Previously, those detailed filings were kept confidential.

In September, Superintendent Lawsky determined that the filings should be disclosed so that the public can provide meaningful comments as part of the ratemaking process. The Department sent a letter to all of the health insurers informing them of this decision. Ten insurers and the industry trade group, the New York Health Plan Association, responded with formal objections, which are permitted by law. On October 19, the Department issued a legal decision rejecting the insurers’ arguments for secrecy. The insurers have the right to an administrative appeal of that decision and, if their appeal is rejected, the right to challenge the decision in court.

Rate applications contain all of the information needed to determine whether a premium increase is justified, including:

• A summary of the amount of money the insurer spent in the last two years on medical claims, which is used to project future claims expenses. Commonly referred to as “medical trend,” this information is the basis of the premiums paid by policyholders.
• The actuarial memorandum, which specifies all of the actuarial assumptions used in analyzing how much medical claims are going to be in the coming year.
• The amount of administrative expenses and profits.

A list of all benefit changes, such as copayments or drug benefits, which have been made to the policy.

Which policies are affected by the rate increases, which geographic regions will be getting increases and the number of policyholders affected.

Emblem does business under the names GHI and HIP. Empire does business as Empire BlueCross BlueShield. HealthNow does business as BlueCross BlueShield of Western New York and BlueShield of Northeastern New York.

The insurers that still have objected to the Superintendent’s decision are Capital District Physicians’ Health Plan, Connecticut General Life Insurance Company, Independent Health, and MVP Health Care.