Health Insurance Rate Filing - Oxford Health Plans (CT), Inc. (Small Group)
On January 9, 2018 Oxford Health Plans (CT), Inc., filed a semi-annual request to raise rates an average of 9.27 percent for a small block of health plans used by employers with 50 or fewer workers.
These are plans that are offered on the open market and not through the state-sponsored exchange. They currently cover 1,215 employees and their dependents in Fairfield, Hartford and New Haven counties.
The plans are compliant with the federal Affordable Care Act (ACA), offering the required Essential Health Care Benefits.
In developing the rate, Oxford anticipates that the cost of medical services and the demand for them will increase by about 8 percent, a factor known as “trend” over the next year. The company said the proposed rate increase reflects a changes in the three-county Liberty Network Savings provider network, which did not result in anticipated savings when the rates were originally calculated.
The company said the primary drivers of the proposed increase are:
- Increasing Cost of Medical Services – Annual increases in reimbursement rates to health care providers – such as hospitals, doctors and pharmaceutical companies.
- Increased Utilization – The number of office visits and other services continues to grow. In addition, total health care spending will vary by the intensity of care and/or use of different types of health services. Patients who are sicker generally have a higher intensity of health care utilization. The price of care can be affected by the use of expensive procedures such as surgery vs. simply monitoring or providing medications.
- Higher Costs from Deductible Leveraging – Health care costs continue to rise every year. If deductibles and copayments remain the same, a greater percentage of health care costs need to be covered by health insurance premiums each year.
- Cost shifting from the public to the private sector – Reimbursements from the Center for Medicare and Medicaid Services (CMS) to hospitals do not generally cover all of the cost of care. The cost difference is being shifted to private health plans. Hospitals typically make up this reimbursement shortfall by charging private health plans more.
- Impact of New Technology – Improvements to medical technology and clinical practice often result in the use of more expensive services, leading to increased health care spending and utilization.
After an actuarial review the Department determined that the company’s price adjustments to reflect the impact of rising medical costs as well as the removal of the federal Health Insurer Fee and a change in network savings were appropriate.
Department also determined that the pricing would meet the federally mandated 80 percent threshold for claims costs for small group business, meaning the company is expected to spend 80 cents of every $1 of premium on medical costs. As a result, the Department approved the increase on March 5, 2018.
The new rates take effect July 1, 2018.