Businesses in the dark on rate process
Kelly Magowan learned that her company’s health insurance premiums were going up 40 percent to over $1,500 a month, just 20 days before the renewal date.“We were blown away by the increase,” said Magowan, one of the principals at Learning Structures, a Stafford company that helps communities all around the country build playgrounds. “It wasn’t anything we could absorb so quickly.”Like many businesses, Magowan got the bad news from her agent. However she might have known something was up if she looked the filing of her insurer — MVP Health Care — submitted at the end of September and approved on Oct. 21, more than two months before the rates went into effect in Jan. 1.That filing, sitting at the Insurance Department offices in Concord, showed that MVP’s overall rate increase would be 30 percent, and spelled out how Magowan’s small group of two (herself and her business partner) and age and the type of work they do, would have pushed up the rate even higher.Magowan couldn’t have looked at that proposal until after the rates went into effect on Jan. 1. Neither could any other member of the public — the filings are a secret.It isn’t as if the insurance company can ask for any rate it wanted. Like a utility, insurers have to justify to the Insurance Department their rate increase based on the cost of health care.In the case of a utility, however, the proposed rate increases filed at the Public Utility Commission are open to the public, and there is a public process to comment on the rates. And when rates are particularly high, the public weighs in, often pressuring regulators to lower them.How much input does the public have into the Insurance Department’s decisions on small-business increases filed every quarter?“The public has no impact,” said Insurance Commissioner Roger A. Sevigny. Sevigny said he would like to see more transparency, and supported Senate Bill 392 — now being considered by the House Commerce Committee — that would require public hearings on rate increases.For one thing, the public would learn that the Insurance Department does deny rate increases – 15 percent in 2009 and the average denial was 30 percent, Sevigny said. And Granite Staters might better understand how insurance relates to the drivers of health-care costs.“What is wrong with more transparency?” he said.The bill, as originally written, would have required hearings before each company’s rate increase — hundreds of hearings, which everybody agreed was impractical. That was changed to one annual hearing after the fact, not to comment on the proposed increase, but to find out what caused the increases that were already approved.Most other states keep filings secret before implementation. Supporters of the status quo compare it to a closed competitive bid process. If one company knew another’s filing, it might try to undercut the other’s rates, forcing the first company to file again, and so on. Utilities are different, supporters argued, because they are a state-regulated monopoly.Even strong supporters of health reform, like Jim Squires, founder of the New Hampshire Endowment for Health, see the insurers’ point of view.“You are protecting proprietary information when bringing any product into the market of a highly competitive field,” said Squires.It is a competitive field, however, without many competitors. Two players — Anthem and Harvard Pilgrim Health Care — split 80 percent of New Hampshire’s subscribers, with MVP at 7 percent. No other insurer has more than 5 percent.Maine is one state that does require public filings of proposed increases as well as hearings for rate hikes in the individual market and for those increases in the group market that don’t spend a specific percentage on medical cost.Other states are also being more assertive in denying increases. California asked Anthem to delay its last individual increase so that the state could investigate it further, and Massachusetts rejected about 90 percent of its health insurers’ rate increases. Insurers in Massachusetts have filed a lawsuit over that rejection.Magowan had left Anthem several years ago after a 25 percent increase to go to the then-cheaper MVP. And after receiving news of the 40 percent hike at that insurer, Magowan and her agent managed to get a much better deal for her company with a health savings account.Still, she would have appreciated knowing what MVP was proposing before it was approved “so that I, as New Hampshire business, would have an opportunity to weigh in.”She also thought that it would not be the worst thing in the world if companies did refile and try to undercut their competitors.“If it meant that companies would have to sharpen their pencils in order for them to compete, wouldn’t that be a good thing? We have to compete,” Magowan said.Bob Sanders can be reached at email@example.com.