August 11, 2015

Does State Have Say on ‘Obamacare’ Rate Hikes?

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Insurance Commissioner John Doak

Insurance Commissioner John Doak

Affordable Care Act health insurance rates are expected to rise in Oklahoma in 2016, and the state Insurance Department insists it cannot do anything about rates except review and approve the paperwork.

In the past, however, the department held a somewhat different view, according to a former high-ranking state insurance official.

Jonathan Small, former government affairs director for the state Insurance Department, said he could recall several instances in which the department used its influence to persuade insurance companies that their proposed rates were either too low or too high.

Two of those cases involved health insurance, Small said.

“It doesn’t happen that often, but it has happened in the past,” said Small, who is now executive vice president of the Oklahoma Council of Public Affairs, a free-market research and advocacy group.

“It would be an awfully gutsy move for a company not to respond to what was communicated to them by the insurance commissioner,” he said.

Small worked for the Insurance Department under former Commissioner Kim Holland, who was defeated in the 2010 election by the current commissioner, John Doak.

Holland declined to comment on the department’s ability to influence insurance rates or the cases mentioned by Small.

Oklahoma statutes appear to give the insurance commissioner authority to make decisions about rates. A provision of Title 36, which governs the insurance industry, states, “The insurance commissioner shall not approve rates for insurance which are excessive, inadequate, or unfairly discriminatory.”

The issue of state rate regulation is under discussion across the country as insurers submit proposed rates for individual and small group health insurance policies they want to sell in the Affordable Care Act market in 2016.

For example, the biggest player in Oklahoma’s “Obamacare” market, Blue Cross Blue Shield, has requested federal approval of rate increases averaging 31 percent for all of its individual plans sold in the state next year. (Premiums paid by most policyholders would rise by less than that because of federal subsidies.) The federal review and approval process will be completed this fall, and open enrollment begins Nov. 1.

Insurance Commissioner Doak declined to be interviewed for this story. His communications director, Kelly Dexter, said in a series of phone interviews and emails that the department would continue to review Affordable Care Act rates, but had no power to change them.

“Basically, we cannot approve or deny any rates submitted to this department. We do not have statutory authority over any rates,” Dexter said.

Dexter had taken issue with a July 10 Oklahoma Watch story that said the department had “jurisdiction over Oklahoma rates.” The story noted that the department so far had not attempted to change rates approved by the federal government for health policies sold under the Affordable Care Act since January 2014.

“The companies just have to file the proper paperwork with us stating that they are going to change the rates, either increase or decrease … We cannot bar them from doing that,” Dexter said.

In 2011, Doak announced he was returning a $1 million grant awarded to Oklahoma to help the state develop a federally approved rate-review capability. The grant had been requested by Holland before Doak took office.

“The Oklahoma Insurance Department currently conducts and will continue to conduct premium rate reviews under state law. However, we will not do so with Obamacare money,” Doak said in a statement provided to CapitolBeatOK, an independent news site.

Dexter said Doak’s statement was consistent with the department’s insistence that it can’t do anything to affect health insurance rates.

“The quote said we review the rates, not approve or disapprove them … We’ve always reviewed rates (in the individual health marketplace). But that doesn’t mean we can change them. Review means to inspect, examine or study, not change,” Dexter said.

“As far as the Obamacare rates, there’s nothing we could have done to change the rates that (Blue Cross Blue Shield) filed,” she said.

According to a study published last year by the National Conference of State Legislatures, Oklahoma was one of six states classified by the federal government as having no “effective” state rate-review program for Affordable Care Act health insurance. The others were Alabama, Louisiana, Missouri, Texas and Wyoming.

In each of those states, the U.S. Department of Health and Human Services has been conducting its own reviews of Affordable Care Act insurance rates.

The National Conference of State Legislatures study noted that some states that opposed the Affordable Care Act in general terms had opted to seek federally approved rate-review capability.

Some opponents of the health-care law don’t see that capability as an opportunity to keep a lid on rate hikes. Instead, they see it as a way to make sure the increases are sufficient to ensure the long-term solvency of the companies.

“That’s the department’s role, to make sure that the rates that they’re filing are adequate for the market,” said State Rep. Glen Mulready, chairman of the House Insurance Committee. “… I believe they need to have that authority.”

Mulready, R-Tulsa, owns a consulting firm that advises employers on health insurance options.

Jonathan Small

Jonathan Small

Small, the former Insurance Department official, said the rate increases being proposed by Blue Cross and other Obamacare insurers across the country do not appear out of line to him. He said the increases are the consequences of the changes brought about by the Affordable Care Act. Insurance Department officials have also attributed the proposed increases to medical cost inflation and higher than expected prescription drug costs.

  • John R Harris

    Interesting. So the same people who blasted a law that dared to provide coverage to those who were without now stands back and featherbeds insurers who seek to rake in even more profit. Yep. Time for Medicare-for-all.