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Thu September 1, 2011
Lifting the Veil on Insurance Rates in Missouri
By Elana Gordon
KANSAS CITY, Mo. – Health insurance companies in Missouri are about to come under a lot more scrutiny for unexplained rate increases. Missouri is one of only two states in the country where rates aren't examined or reported. KCUR's Elana Gordon has the details on a new federal rule aimed at changing that.
Pat Tomek worries about the rising costs of health insurance. The self-employed 58-year-old says he doesn't have a lot of money to spare.
"As a musician, I don't make much money," says Tomek. "I'm teetering on the edge all the time. But I don't like idea of not having health insurance at all."
Tomek - like about half a million other Missourians - has gotten health coverage on his own or as part of a small group on the private market.
He says even with a broker, understanding his policy has been confusing. To his surprise, he learned that one plan he had wouldn't cover most of the costs of routine procedures. So he switched plans. Then last year, he says his insurance company notified him that his premium - the amount he pays each month for his plan - was going up.
"I had been paying about $250, and I think it was going up about 20 percent," says Tomek.
"You know, there's always been this floating insurance premium that no one has control over, especially the consumer," says Judy Baker, regional director of the U.S. Department of Health and Human Services.
Baker says insurance rates have been rising at an alarming rate. And even more so for people like Pat Tomek, who has less market power as an individual, compared to a large business with a lot of employees who can share the risk.
Baker says as part of efforts under the federal health law to address this, insurance companies must now - effective September 1 - disclose to her office and to policy holders when rates for individual and small group health plans are going up...And if they are going up, for how much and why.
"What's going to happen here is this kind of scrutiny really makes these people sharpen their pencils," says Baker. "And in the past there has not a whole lot of oversight and scrutiny so when insurers raised rates, they didn't even have to explain to their consumers why they were doing so."
Baker says HHS will also do a special review of any rate increase above ten percent and evaluate whether it's justified or not.
For many states, this new federal procedure doesn't change much. That's according to Kansas Insurance Commissioner Sandy Praeger, who's also a leader in the National Association of Insurance Commissioners. Praeger says she believes that Kansas, for example, already meets the standard of this new law. Companies must file rate increases with her department. She can also respond to them.
"I can't deny a rate unless I demonstrate that it's excessive, not needed, or someway discriminatory," says Praeger. "But I do have the authority to deny it if it's not actuarially justified."
Praeger says she has used that authority.
Such is not the case in Missouri.
Missouri and Montana are the only states nationwide where companies don't have to disclose their rates. There are just seven other states that HHS has identified as not having an effective rate review process.
Even though HHS will now cite whether rate increases of more than ten percent in Missouri are justified, the office doesn't have the authority to act on its review.
Andrea Routh heads the consumer group, the Missouri Health Advocacy Alliance. She says the new rule is still a good step in addressing high insurance rates in Missouri and hopes it pushes companies to better control increases.
"Consumers at least in Missouri will finally have some indication if their company is going to ask for a rate increase, and know that somebody at least looked at that and said whether they think - given their knowledge at HHS - it's justified or not," says Routh. "We'll have that information, which is more than we have now."
Robert Zirkelbach is with America's Health Insurance Plans, a national trade group representing the health insurance industry. He says this new provision misses the real problem.
"Simply focusing on health insurance premiums while ignoring the underlying cost of medical care will not make health coverage more affordable," says Zirkelbach.
Zirkelbach says the rising cost of medical care, the age of policy holders, and their health status, are some of the factors driving up insurance costs. This, in turn, gets spread to consumers in the form of raised rates. He also says the new rule isn't needed, given other state and federal regulations.
Kansas Insurance Commissioner Sandy Praeger predicts that a lot of companies will be filing "justifiable" rate increases of more than ten percent.
Larry Levitt, with the Kaiser Family Foundation, says reviewing insurance rates is not going to solve the health care cost problem, but it could start to make a difference.
"You know, insurance companies - particularly big companies - have a lot of control, or potentially have a lot of control over how health care is delivered in an area," says Levitt. "So the more pressure they feel, the more pressure they're going to bring to bear on health care costs more generally."
And at the least in Missouri, there will now be a baseline for what insurance rates are in the state, and the rationale behind them.
Funding for health care coverage on KCUR has been provided by the Health Care Foundation of Greater Kansas City.
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