Connecticut: Rate increase Request: 12.8%. Approved? 3.1%.

There's been a recent batch of insurance rate change requests reported across various states which has gotten a lot of press. However, as I noted a couple of weeks ago, there can be a big difference between what the insurance companies ask for and what the state insurance commissioner approves. This is one of the most important (and least-written about) aspects of the ACA: Insurance companies can no longer just jack up their prices however much they feel like; those rates have to be approved by the insurance commissioner for the state they're operating in if they want to sell their wares on the exchange.

Even off the exchange, I believe they still have to comply with the "80/20" medical loss ratio regulation which requires that at least 80% of the premiums be used for actual, real-world medical treatment (update: 85% for off-exchange large-group policies), not for corporate profits, CEO bonuses, junkets to the Bahamas and the like. This law has already saved (or refunded) consumers billions of dollars, and almost no one is talking about it.

In the case of Connecticut...

The Connecticut Insurance Department has rejected proposals by two insurance companies to raise health insurance premiums next year, and rejected the rates proposed by a third company new to the individual market.

Regulators approved plans the insurer HealthyCT to lower its rates.

In the case of Anthem Blue Cross and Blue Shield, the department deemed the proposal to raise rates by an average of 12.5 percent to be excessive, and directed the carrier to submit new rate proposals for review.

Similarly, the department asked UnitedHealthcare to submit new proposals for plans it intends to sell in 2015. The company doesn’t sell policies in the state’s individual market this year.

The department turned down the request by ConnectiCare Benefits Inc. to raise rates by an average of 12.8 percent, but approved a rate hike averaging 3.1 percent.

And regulators will allow HealthyCT to lower its rates by 8.5 percent, slightly less than the company initially proposed.

UPDATE: Re. market share and weighted averages, I've found articles which give Wellpoint's (Anthem) as about 60% and HealthyCT's as 3%. Since UnitedHealthcare is new to CT's market, that leaves ConnectiCare to hold the remaining 37%.

We don't know what Anthem's final rates will be, but we do know that the Connecticut insurance regulators called their 12.5% spike "excessive"...and given that they dropped ConnectiCare's from a similar 12.8% down to just 3.1%, I have to imagine that they'll proceed similarly with Anthem; call it no more than 6% at the outside.

With this in mind, a weighted average would look like:

• Anthem: 6% (?) x 60% = 0.036
• ConnectiCare: 3.1% x 37% = 0.01147
• HealthyCT: -8.5% x 3% = -0.00255
• Weighted Average: 4.5% (assuming 6% for Anthem)