NEW YORK, NY (10/27/2011)(readMedia)-- Benjamin M. Lawsky, Superintendent of the Department of Financial Services, announced today 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.
Superintendent Lawsky said, "This is a great day for transparency and the public's right to know how their health insurance premiums are set. Transparency will promote competition and allow the public to make effective comments as part of the rate review process. I applaud these companies for their decision and hope the remainder of the industry will soon see the light."
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.
Following the lead of UnitedHealthcare, Aetna, Emblem, Empire, Excellus and HealthNow have agreed that their entire applications, including all required information and exhibits, will be made available to the public. Only certain details of specific contracts between an insurer and hospitals or other health care providers will be considered for exclusion because other providers can use that information to demand higher payments and such information little value for consumers to be able to make informed comments on the rate requests. The six insurers' actions terminate their challenges to the Superintendent's decision.
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.
The 2010 prior approval law, which went into effect in 2011, was passed in response to the continuing rapid rise of health insurance premiums and in the hope that transparency and review would help slow that rise. To that end, the law mandates public comment. The Cuomo Administration's position with respect to rate increase transparency is based on the need for the public's comments on rate increases to be relevant and meaningful and thus informed by the detailed information in the rate increase filings.
Elisabeth Benjamin, Vice President of Health Initiatives at the Community Service Society and co-founder of Health Care For All New York, said, "It's gratifying to see the domino effect actually playing out in favor of New York's consumers and small businesses. The past decade's secret system of hidden rate filings is a thing of the past-now New York's consumers and small businesses finally have the opportunity to understand why insurance costs are so steep, and as a result, now will be able make well informed decisions about which carrier they trust to provide their coverage."