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Connecticut Health Care Premiums Up 20 Percent As Obama Seeks Limits

Matthew Sturdevant

February 23, 2010

Health insurance premiums for individual medical plans jumped in price by an average of more than 20 percent this year in Connecticut, placing the state squarely in the cross hairs of the national health care debate.

That increase, revealed by the state Insurance Department, followed hikes of 16.7 percent and 11.3 percent in the two previous years. It applies to plans bought by individual customers on their own, not through employers or other groups or provided through Medicare, Medicaid or a state program.

The rapid rise in individual rates is pushing the number of uninsured Americans toward 50 million, and it is stirring nationwide anger. Opponents of the increases blame the insurers.

President Barack Obama on Monday called for a national agency to control rate hikes as part of his latest reform plan.

But state Insurance Commissioner Thomas Sullivan, who approved the rates late last year, said that Obama's plan won't work unless the cost of medical care levels off.

"I live in a world where actuarial science means something," Sullivan said in an interview Monday. "So, as much as I'd like to do what's popular or what feels good, I have to behave based on objective measures of performance and within guidelines that are set by actuaries."

Insurers, likewise, say that medical costs have forced the rate hikes. The prices of goods and services such as doctor fees, drugs and medical machines, combined with higher use by patients, have pushed up overall costs by 15 percent to 20 percent a year.

"I cannot imagine what tools the federal government could bring to bear to oversee what are fundamentally actuarial equations," said Keith Stover, a spokesman for the Connecticut Association of Health Plans. "It's not, at the end of the day, about the premium. It's about the health care cost."

The current increases are part of a clear trend in Connecticut. Insurers requested increases averaging 19.5 percent for plans taking effect in 2008, 2009 and 2010, and the Insurance Department approved increases of 17.1 percent on average for those years, a department spokeswoman said.

Requested rates and approved rates for individuals have increased in Connecticut in each of the past three years.

In 2007, insurers requested an average increase of 16.1 percent for individual plans taking effect in 2008, and the Insurance Department approved 11.3 percent. In 2008, insurers requested a hike of 19.5 percent for 2009 and 16.7 percent was approved.

An average increase of 21.4 percent was requested for 2010 plans, and 20.7 percent was approved.

The total number of people insured through individual plans was not immediately available on Monday, but is in the tens of thousands in Connecticut, perhaps well over 100,000.

The breakdown of premium increases by company was also not available Monday, as the filings are lengthy and complicated. Not all plans have an increase each year, and the rate changes vary greatly depending on the customers in the plan and the benefits provided.

Nationally, several organizations that track health premiums for group plans such as those sold through employers said they were not aware of state-by-state figures for individual plans.

Group plans throughout the nation had their smallest average increases in years in 2008 and 2009. The average family premium in a group plan last year totaled $13,375, up 5 percent from 2008, according to the Kaiser Family Foundation. Mercer, the benefits consulting firm, reported a 5.5 percent increase in group plan premiums in 2009, the smallest jump in a decade.

For 2010, group plan increases nationally are not yet available.

Connecticut group plan increases for 2010 are believed to be higher, based on a December report by the state Office of Legislative Research.

Obama released a detailed health reform plan Monday, which includes a health insurance rate authority designed to monitor premium rates. Rates are now approved by regulators such as Sullivan in each state separately.

It remains unclear how and whether a federal authority would oversee the setting of rates. That issue will be part of the debate in Congress as Obama attempts to jump-start reform.

Sullivan said he supports efforts by the president and policymakers to reform health care, but said he is "skeptical of the talking points because it seems to create a new federal authority, and I'm concerned that a federal authority would effectively supplant an area that's been regulated by the states in the past."

Attorney General Richard Blumenthal said he is also in favor of continuing to have states regulate health insurance rates, rather than the federal government. But he said the system in Connecticut is broken and needs to be fixed.

Premiums are only partly driven by medical costs, Blumenthal said. That was proved last summer when Anthem Blue Cross and Blue Shield in Connecticut tried unsuccessfully to increase premiums for individual plans by 23 percent to 32 percent.

"What we showed in those proceedings by cross-examining witnesses, which I did personally, was that tens of millions of dollars are siphoned out of Connecticut, away from Connecticut consumers, to Anthem's parent corporation in revenue and profit," Blumenthal said. "So, clearly, increasing medical costs is not the only factor driving the outrageous increases in premiums and charges to individual consumers."

For Anthem's part, company spokeswoman Sarah Yeager said, "The pricing structure of our products is a direct reflection of the medical risks and costs associated with this market. Rising insurance premiums are a symptom of the underlying health care costs."

Congress will begin health reform talks at a "summit" on Thursday.