Commissioner: Don't blame insurance hikes on reform

By Cherry Sokoloski
North Forty News

Fall is a peak time for insurance renewals, and some folks have been taken aback by double-digit premium increases this year. However, they can't blame the big rate hikes on health care reform, according to Colorado Insurance Commissioner Marcy Morrison.

Morrison recently asked staff analysts to examine factors that are driving insurance premiums higher.

"What we found isn't surprising: health insurance premiums continue to rise," Morrison said. "But what may be eye-opening for some people is that federal health reforms have contributed from zero to a maximum of 5 percent of those increases. It's not the primary cause for increasing rates."

With large-group plans, 0 to 1.4 percent of increases can be attributed to health reform, while individual plans can trace 0.3 to 4.9 percent of increases to reform.

Morrison retired Dec. 1, but she had a busy fall before packing up her desk. In particular, her office received lots of calls from consumers who were facing big premium hikes when they renewed their policies.

The Colorado Division of Insurance reviews all requests from insurance companies for rate increases. Colorado has more than 300 health insurance carriers, and one company can have dozens of different plans. Each plan must be reviewed separately.

In the calls coming in to Morrison's office, the most commonly blamed culprit for premium hikes was federal health care reform. "For months, I have been hearing about the Patient Protection and Affordable Care Act causing increases in premiums," Morrison said. Some provisions of the bill went into effect on Sept. 23.

Morrison decided to find out the facts about the premium hikes. In particular, the staff analyzed what percentage of premium increases could be attributed to the new health care bill, PPACA.

The analysts found that so far, while federal reform has had some effect on premiums, it has been minimal. "You may get a 15 to 20 percent increase," Morrison said, "but I was trying to correct the misinformation that it is all attributable to the federal reform plan."

The Division of Insurance study looked at all rate increase requests over a three-month period, August through October. The study included "some of the largest plans in the state," Morrison said, affecting a substantial number of people.

Many factors involved

If health care reform isn't the main culprit, what is causing the big premium hikes? Morrison explained that the answer is complicated.

"People always look for a simple answer," she noted, whether it's blaming hospitals, doctors or insurance companies. However, she stressed, there are multiple factors causing premium costs to rise. The individual insurance market, versus the group market, is seeing the lion's share of those increases.

Insurance carriers must justify rate increases based on a series of "rating factors" allowed by law in Colorado. There are numerous factors that can be considered, including age, tobacco use, type of industry and previous claims.

Increased provider costs, including hospital and doctor bills, can drive premiums higher. Cost shifting can do the same; it pushes premiums higher for the insured, to cover uncompensated care of the uninsured as well as inadequate payments from Medicare and Medicaid.

Utilization is also important. That refers to the frequency with which people use the health care system, and it can be affected by an aging population, an increase in societal health problems, such as obesity, and an increase in testing by doctors.

Colorado has two new insurance mandates – yet another factor in premium hikes. As of 2010, maternity coverage must be offered in the individual market, and no gender rating is allowed in the individual market.

"There are so many factors to put into the mix," Morrison said, "including people's own behavior." She said people must take responsibility for their own health, including what they eat, their lifestyle and their own health maintenance – such as getting medical care before a health issue becomes serious.

On the other hand, she acknowledged, some people – especially the uninsured or underinsured – can't afford routine medical checkups.

Because of new laws at both the state and national levels, the Division of Insurance can now scrutinize insurance companies' requests more thoroughly, to see if rate hikes are justified. At the state level, the Division can dig deeper into insurance companies' financial records. Nationally, PPACA awarded the division a $1 million grant this year to hire additional experts to do the digging.

U.S. system rated

As she prepared to leave office, Morrison took the opportunity to rate the American health care system as a whole. "In some areas, Americans are so advanced in medicine," she commented, "but not in terms of getting information back and forth among patients, providers and insurance companies." She wants to see better use of electronic patient records, so that all health care providers can communicate and have the necessary information available.

Morrison would like to see health care in the United States become "more accountable and more efficient," and she argues that it's possible to control medical costs. One suggestion is to make greater use of physician assistants and nurse practitioners rather than relying so much on doctors.

Many Americans are uninsured and can't just walk into a clinic and get care, Morrison pointed out. "We should have quality and access – other than emergency rooms, the most expensive kind of care," she said.

"For many years," Morrison commented, "Americans have been stuck in the belief that 'By God, the American health care system is the best in the world.' But if you stand still, someone will run you over eventually." Other countries have made and are still making substantial changes in their health care systems, she noted.

Morrison thinks the PPACA is a step in the right direction, but by no means the final answer to America's health care problems. "It's a huge public policy issue, and change does not come overnight," she said. She cited a couple of PPACA's predecessors, Medicare and Medicaid, as programs that have undergone frequent change over the years.