Hartford Business Journal

14 Hartford Business Journal • June 29, 2015 www.HartfordBusiness.com for modest, single-digit rate increases. The proposed rates, which still must be approved by the state Insurance Depart- ment, contrast with the double-digit premium increases many small employers have endured in recent years and could be a sign that the small group health insurance market is stabi- lizing after years of uncertainty, said brokers, insurance executives and regulators. That's a bit of good news for employers, which have dealt with escalating healthcare costs by retooling their benefit plans and shifting more costs onto their workers. "Overall, the [proposed 2016] rate increases are benign compared to previous years," said Paul Lombardo, an actuary for the Connecti- cut Insurance Department, who reviews all rate requests. Several factors are impacting 2016 rates, brokers and insurance executives said. In some cases, benefits utilization has leveled off following a post-recession spike in the amount of health care consumed by individuals. Also, following years of uncertainty and change brought on by the Affordable Care Act, some insurers last year saw their claims experience come in lower than expected and are readjust- ing their rates accordingly. Competitive pressures are also playing a role: The small group market will expand in 2016 for the first time to include employers with 51-100 workers, opening up a significant opportunity for insurers to grab new market share. It's a move that's enticing insurers to be more aggressive on plan pricing. "Some carriers that have been in the Con- necticut small group market for a long time may be concerned with losing market share as a result of their uncompetitive rates for the past couple of years," said Richard D. Lovallo, an underwriter for C.M. Smith Agency in down- town Hartford. Lovallo said Anthem and UnitedHealth- care/Oxford in particular have ceded market share because of their less competitive rates in the last few years; their decision to decrease and slightly increase rates, respec- tively, could be a sign they are try- ing to protect their remaining turf and/or plow new ground. Marketplace disruption The small group rate requests pitched by insurers include health plans that will be sold on and off the state's health insurance exchange later this fall. They go into effect Jan. 1 and cover about 168,000 Connecticut residents. State insurance regulators are still reviewing the rates and could demand some changes. For example, a recent deci- sion by the board of the state's insurance exchange, Access Health CT, to increase its assess- ment fee on all individual and small group health plans sold in Connecticut (from 1.35 percent to 1.65 percent of premiums) will likely mean slight increases to the current rate proposals. Lombardo said the percent of premiums insurers spent on claims in 2014 was lower than expected, which partially reflects why this year's rate requests are, in most cases, more modest. That could have resulted from a higher percentage of young people signing up for insurance in 2014, which was the first year the Affordable Care Act's individual mandate went into effect. The law, which requires most people to buy insurance or pay a pen- alty, aims to get more young people insured so they can expand the risk pool and help keep costs in check for patients who use the healthcare system more often. "Young invincibles are signing up because now they have to," Lombardo said. Anthem's proposed 7.17 percent rate decrease was the lowest request made by any insurer. That small group plan covers 40,000 people. Connecticare requested the largest rate increase of 8.6 percent but that was only for a small group plan covering 48 people. The Farmington-based insurer pitched a 5.6 percent rate hike on another small group plan that covers 48,000 people. Another major factor impacting 2016 rates is the expansion of the small group market, which will include employers with 51-100 employees beginning Jan. 1. The change, also brought on by the Afford- able Care Act, will force groups with 51-100 workers to face more restrictive plan rating rules as well as additional benefit and cost- sharing requirements, brokers and insurers said. Some employers will see their rates increase and could turn to a self-insured health plan to contain costs, Lovallo said. Other companies will see their costs go down. Long-term, the expansion of the small busi- ness risk pool could help rein in premiums. Regardless, the change means small group insurers will have an expanded client base to sell to during this fall's open enrollment sea- son, which means maintaining competitive rates — even if it cuts into margin — will be important. "Everyone is going to be aggressive any time you see mar- ketplace disruption," said Jason Madrak, Harvard Pilgrim Health Care's vice president for Connecti- cut. "Anytime that happens you're going to see all insurers aggres- sive on pricing." Cost containment Michelle Zettergren, Connec- ticare's senior vice president and chief sales and marketing officer, said insurer's cost management programs, including the adoption of accountable care organizations and other initiatives aimed at improving care quality, are starting to produce results that are impact- ing health plan rates. Connecticare, for example, has more than 15 accountable-care relation- ships with Connecticut doctors and hospitals that aim to better coordinate patient care to keep patients healthier and out of high-cost emergency rooms. The insurer employs a care management team that works with providers to coordinate patient follow-up appointments and care. The results so far are encouraging, Zetter- gren said. Patients that participate in Connec- ticare's collaboration arrangements see their doctors 10 percent more often and are admit- ted to the hospital and emergency room 9 per- cent and 6 percent less often, respectively. "Based on quality indicators we are see- ing better health outcomes," Zettergren said. One area that insurers and regulators say is cause for concern, however, is prescrip- tion drug costs. The increase in utilization of expensive specialty drugs for diseases like Hepatitis C and cancer are significantly driving up costs and could lead to larger rate increases in the future, Zettergren said. n from page 1 CT Small Group Health Insurer 2016 Rate Requests Insurer Rate request Covered lives Anthem Health Plans -7.15% 40,000 Aetna 0.10% 40,400 Oxford Health Plans 0.50% 3,450 Oxford Health Insurance 1.20% 26,000 UnitedHealthcare 1.20% 300 Connecticare Insurance Co. 5.60% 48,000 HealthyCT 6.01% 6,139 Harvard Pilgrim Health Care 7.20% 3,360 Connecticare Inc. 8.60% 48 Total 167,697 S O U R C E : C T I N S U R A N C E D E P A R T M E N T Small group market faces disruption REPORTER'S NOTEBOOK Caring streak marks Citizens' Maass Lisa Maass, newly seated as chief of Citi- zens Bank's Connecticut franchise, says her focus is on building its reputation as "a very good commercial bank,'' including ramping up staffing. "We have a plan to succeed," Maass said in an interview last week, days after the $173 billion-asset Rhode Island lender intro- duced her as its new Connecticut president. "We have a team that works well together." Already with about 700 Connecticut employees spread among more than 45 branches and loan-production offices state- wide, Citizens has hired 73 workers so far this year, Maass said. The bank plans to add an unspecified number of new workers in the state later on, a Citizens spokesman said. With them, Citizens will pursue expan- sion of its presence in the state's consumer-, mortgage- and commercial-banking mar- kets, Maass said. It will also maintain its active community engagement, a reflection of both the bank's and Maass' commitments to giving back. She was a co-founder of "Read To Grow,'' the Branford nonprofit that in its 15 years has donated some 1.3 million books to individuals, school teachers, hospitals and other family-support organizations state- wide to boost literacy among the neediest. Citizens was a "Read To Grow'' founding sponsor and continues to financially sup- port the literacy organization, said Execu- tive Director Kyn Tolson. Maass also has a seat on its board. "She's very smart and she's someone you can rely on to get to the heart of the matter right away and come up with solutions for people beyond your immediate concern,'' Tolson said. "She knows how to marshal enthusiasm and support.'' Maass says she's also enamored with banking. As Citizens' Connecticut presi- dent, she will divide her offices between New Haven and downtown Hartford, on the same 10th floor of State House Square as the office of U.S. Sen. Richard Blumenthal. "Delivering solutions. Meeting with cus- tomers,'' she said. "I've been doing this 22 years and I have customers who have been with me 20 years. It's been good to watch them grow.'' Maass says her outlook is upbeat for Connecticut's economy, which through employers' fresh investments in intellec- tual property and equipment, has sprouted enough jobs to nearly replace ones lost in the Great Recession. "I feel positive about Connecticut,'' she said. However, she admits to harboring wor- ries about this state's budget deficit, as well as the stubbornly high achievement gap among Connecticut schoolchildren, many of whom struggle with food security. The latter is why Maass and Citizens Bank are engaged with the Connecticut Food Bank, which also is a bank customer, she said. Maass sits on the organization's fundraising committee. Citizens loaned the food bank $7.5 mil- lion to build its new Wallingford headquar- ters, into which it will consolidate several outlying offices when it opens later this year, she said. — Gregory Seay Lisa Maass, Connecticut president, Citizens Bank P H O T O | C O N T R I B U T E D

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