j_hce_2017a_2017-12-15t09:05:23z2 Hearing Summary
Location: LSB B
Committee Discussion with DOI Regarding 2018 Insurance Rates
COMMITTEE ON COLORADO HEALTH INSURANCE EXCHANGE OVERSIGHT COMMITTEE
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10:23 AM -- Committee Discussion with DOI Regarding 2018 Insurance Rates
Peg Brown, Chief Deputy Director, DOI, and Michael Muldoon, Actuary, DOI, came to the table and distributed a handout to the committee (Attachment C). Ms. Brown referred to the handout during her testimony. She discussed the primary components of insurance premiums. She explained that health care service costs are the primary component of health insurance premiums and that utilization rates and unit costs contribute to this cost. She stated that there are substantial differences in health care service costs between geographic areas within the state, which also impacts premiums.
Mr. Muldoon discussed the actuarial standards associated with setting premium rates. He explained that the DOI reviews the financial condition of each company and evaluates the potential risk that company poses to the exchange and Colorado residents should it become insolvent during a plan year. Insurance carriers are required to provide a variety of data and justification of actuarial assumptions to support proposed rate increases, including:
• summary of claims, premiums and membership for the 2016 base experience period;
• historical monthly medical and pharmacy claims experience for 4 years;
• utilization and unit cost claim trend development, and adjustments for future provider reimbursement levels;
• risk adjustment program estimates of payments or receivables and their impact to premiums;
• changes in population risk and morbidity levels from 2016 to 2018;
• changes in benefit levels and actuarial values for each benefit plan;
• changes in administrative expenses and profit margins loaded into premium rates; and
• actuarial estimates of incurred but not reported (IBNR) claim reserves built into claim estimates.
Ms. Brown told the committee that the uncertainty about whether the individual mandate would be eliminated and whether Cost Sharing Reductions (CSRs) would be funded complicated the premium rate setting process. She explained that the division required carriers to file two sets of rates this year: one assuming CSRs would be paid in 2018; and another set assuming the CSRs would not be paid. She pointed out that this preplanning made it easier for the division and the exchange to switch to the non-CSR filings when the federal government announced it would not continue paying the CSRs. Committee discussion followed about the carriers in the individual market who do not offer plans on the exchange.
Committee discussion followed about the types of plans offered on the exchange, the absence of platinum plans on the exchange, the review process available to consumers when a carrier denies coverage, the reduction in CSR funding, plan formularies, and premium tax credits.
Ms. Brown discussed the DOI study that looked at the following: establishing a high cost reinsurance program which subsidizes payments by carriers for high cost conditions and claims; encouraging competition between and work by providers to reduce health care service costs; and working with existing and new carriers for expanded service areas to increase carrier competition in geographic areas with limited choices.
Representative Kennedy told the committee about his collaboration with Senator Lambert to address issues around reinsurance. He pointed out that a reinsurance program is a cost shifting solution, and not a solution to the underlying cost of care. Further discussion of cost of care and the role of physicians and patients in discussing the cost of care followed.
Senator Lundberg made closing comments focused on the cost of health care services and the need for consumers to ask providers about the cost of services.
Senator Lundberg adjourned the meeting.