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Insurance Commissioner Scrutinizing Proposed Higher Health Premiums

The three biggest health insurance companies in Montana met with state insurance commissioner Matt Rosendale Wednesday to explain their price increases for 2018.

Montana’s insurance commissioner says she’s not surprised that health insurance companies are asking for rate increases next year of more than 20 to 30 percent. But, she says, those are just requests, and it’ll be at least a couple of months before the actual rates are known.Monica Lindeen’s office has the power to deny health insurance companies rate increase requests if the companies can’t justify the higher prices. That’s power the state legislature gave the commissioner’s office only a year ago.

Lindeen says it’s very early in the process of reviewing the new rate requests, which were just made public this week.

"We have an independent actuary that we’re working with who’s in the process of doing the initial review."

Lindeen says one reason rates might need to be higher this year, is because now is the first time that insurance company’s have a full year’s business experience to look back on under the federal Affordable Care Act.

Until now, they haven’t had good numbers on revenue and expenses in a world where they can no longer deny people coverage for pre-existing medical conditions, or charge people with them substantially more.

Insurance companies nationwide are now saying they’re paying out more in claims than they originally estimated.

Nor did insurance companies know what to expect from the so-called “Obamacare” law that for the first time required most Americans to have health insurance or face a tax penalty.

"I think we were all a little concerned, not just here in Montana, but across the country, that you have insurance companies that are fighting to gain market share, and so they’re trying to keep their costs as low as possible. There’s no claims history to evaluate, really, those rates that were originally set. So there was some concern that maybe they were set too low originally, and it turns out to be true."

Lindeen says she’s also concerned that health insurance companies might be asking for higher premiums as a hedge against the U.S. Supreme Court this month ruling that people in states like Montana that use the federal health care exchange can no longer get federal subsidies to help them afford health insurance.

"We told insurance companies here in Montana not to take that into account, but certainly at this point I don’t know if they did, if they followed my advice."

But the insurance commissioner’s  power to deny rate increases is limited by one major factor, Lindeen says.

"There is nothing we can do as regulators and as an insurance company with the cost of going to get some type of procedure. That’s something that the hospitals and the clinics and the physicians need to figure out, and we all need to work collectively to figure out is, how do we drive down that cost of care?"

This year could also be an anomaly in terms of how much health care people are actually getting, since many of the insurance companies’ new customers have only now been able to afford health coverage, because they’re getting Obamacare subsidies.

"There was a lot of pent up demand for health care, and as a result  they did have a lot of claims. And I think you will see that trend downwards, as folks have been getting that pent up care."

Last year the average premium increase for individual health insurance plans in Montana was only 1.5%, so a potential increase next year of 20 to 30% is a big leap. But Lindeen says that before President Obama’s health care law passed, double-digit rate increases were common in Montana, and those being requested for next year are not the largest she’s seen in her tenure as insurance commissioner.

"And I think it’s also important to remember that, while the insurance rate is probably going to be higher, we’re going to review those rates, and make sure that it’s actually needed. And we will file objections with the company to bring it down if it’s not needed."

There’s no hard and fast date for when health insurance prices for next year in Montana will become final. State law give the insurance commissioner a 60-day time period to work with insurers to set premium prices, but Lindeen says the process can take longer if her office and insurance companies need more time for dialog.

Eric Whitney is NPR's Mountain West/Great Plains Bureau Chief, and was the former news director for Montana Public Radio.
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