Since 2000, higher health insurance premiums have become a significant problem for ordinary Americans. Premiums have increased at a far greater rate than workers’ wages, to the point where many Americans are skipping appointments and medical tests or postponing getting health care. The health insurance mergers of Anthem and Cigna and Aetna and Humana are supposed to alleviate this problem; the merging companies insist that substantial efficiencies will flow from these mergers, benefiting consumers by leading to lower health care costs. However, their actions prove that this assertion is inaccurate. Nowhere is this more apparent then in Connecticut, where major health insurers just put in requests for very large rate increases.
The requested rate increases are for individual and small group policies offered to employers with 50 workers or less. They range from Oxford Health’s 2.1% to Golden Rule’s 32%. Most of these proposed increases are much higher than the medical inflation rate of 9.6%. Anthem, the state’s largest insurer, requested an average increase of 26.8% for individual plans. As previously noted, Anthem is attempting to buy Cigna, and if the merger is approved by the State Insurance Commissioners, State Attorneys General, and the Department of Justice, the resulting Anthem-Cigna company would control approximately 64% of Connecticut’s health insurance market.
Insurance Commissioner Katharine Wade has taken note of these requests, and she has responded by scheduling public hearings for August on the rate increases requested by Anthem, Aetna, and ConnectiCare. A public comment period on all the increases began today and will continue until the filing is closed. These requests come at a time when Commissioner Wade is reviewing the Anthem-Cigna merger; Connecticut consumer groups have criticized her for a conflict of interest and some have called for Governor Dannel Malloy to remove her. They state that Commissioner Wade previously lobbied for Cigna, is married to a Cigna executive, has family members who have worked for the company, has a deputy with ties to Cigna, and allowed an official who worked at Cigna to be involved in the state’s regulatory review of the merger.
Anthem is clearly trying to have its cake and eat it too. On the one hand, the company reassures consumers that the merger will be to their benefit, and lead to lower healthcare costs and premiums (although it is extremely vague on the details of how this will be achieved). But actions speak louder than words, and Anthem’s actions tell a very different story. Connecticut insurance markets are already highly concentrated, and this merger will have a massive impact. If Anthem’s claims were true, surely we would expect to see signs of reduced healthcare costs and the company would be lowering premiums, or at least only raising them in line with the inflation. Instead, Anthem has requested a rate increase almost three times the medical inflation rate. When Anthem makes statements about lower costs for consumers and then turns around and demands such high rate increases, it’s effectively saying, who are you going to believe: me or your lying eyes?
Fortunately, the Connecticut Insurance Department has sweeping powers to reject or modify the rates, based on its review of the filings, and the power to reject or modify the merger, based on its review of the transaction and its likely effects on consumers. The Department should exercise this authority and reject the rate increases, reducing them to the medical inflation rate, and it should reject the merger, on the grounds that it will harm consumers and lead to higher premiums. Anthem’s own actions support that conclusion.