Problems Identified in 2015 Health Insurance Prices

Secretive Projections, Overestimated Costs Need Scrutiny

CoPIRG Foundation

After weeks of analysis, the Colorado Consumer Health Initiative (CCHI) identified several proposed health insurance rates that need increased scrutiny to ensure their 2015 prices are properly justified. CCHI submitted their findings on nine different rate filings along with over 700 petitions gathered by the CoPIRG Foundation to the Colorado Division of Insurance (DOI), which will review and either approve or deny the health plan proposals by early September.

According to the analysis, problems in 2015 prices include overly secretive projections of enrollee health, overestimates of prescription drug costs, and more.

“As health insurance companies propose new rates for 2015, it’s critical the Colorado Division of Insurance makes sure insurance companies prove they have done everything they can to keep costs low without sacrificing quality care,” said Danny Katz, Director of the CoPIRG Foundation. “Consumers are counting on them to stand up for us and carefully scrutinize every proposal to make sure that every penny is justified.”

In late June, the Colorado Division of Insurance publicly released health insurance companies’ proposed prices for their 2015 plans. Under the proposals, some plan’s premiums would decrease while some would increase. Every proposal will be reviewed by the DOI and will either be approved or denied by early September.

In an effort to help the DOI determine whether the costs and prices for 2015 have been properly justified, CCHI analyzed nine specific plans. Coming out of that analysis, they identified the following problems that the DOI should pay particular attention to:

• Too Many Secrets. There is a lack of information about how companies projected the health of their enrollees, geographic experience, membership distribution and more, which makes hard to understand how rates are developed or evaluate their merit.
• Little to No Account for Reduced Uncompensated Care. During the first quarter of 2014, the Colorado Hospital Association reported a 36 percent decrease in charity care per hospital, which should reduce the cost of insurance as the need to shift the cost of caring for the uninsured onto the insured. Unfortunately, it does not appear health insurance companies have taken this shift into account in their 2015 prices.
• Unexplained Projections for High Enrollment of Sick Customers. Several insurers project sicker consumers to enroll in 2015 than in 2014, which seems unlikely given that consumers with the highest health needs were the most likely to already have enrolled in 2014. 
• Overestimated Pharmaceutical Costs. The cost of prescription drugs grew 3.6 percent last year. However, some companies are projecting drug costs will increase up to 21 percent this year.

“We have asked that the Colorado Division of Insurance verify that no insurance company is taking advantage of consumers in this mass filing process,” said Adam Fox, Director of Strategic Engagement for the Colorado Consumer Health Initiative.  “Coloradans need access to affordable health insurance so they can get the health care they need, when they need it.”

Earlier this week, the CoPIRG Foundation submitted over 700 comments from Colorado consumers calling on the DOI to ensure health insurance companies have justified every penny. Over the upcoming weeks, the CoPIRG Foundation and CCHI will continue to watchdog the rate review process and outreach to Coloradans across the state to raise their voice.

You can follow their work at @CoRateWatch.