Connecticut: Holy smokes. Here's some perspective on "double-digit health insurance rate increases" for you... (update)

2018 MIDTERM ELECTION

Time: D H M S

This post actually has almost nothing whatsoever to do with the Affordable Care Act itself.

Every year I dig through hundreds (thousands?) of insurance premium rate filings for carriers in every state. For the most part I ignore everything except for my core focus area, the Individual Market, although on occasion I also try to run analysis of the Small Group market filings as well. I don't really pay much attention to the Large Group market filings.

However, there's a bunch of other types of health/medical insurance as well, and one which I've written next to nothing about since I started the ACA Signups project is also one which is becoming increasingly important as the Baby Boomer generation retires: Long-Term Care insurance.

To illustrate my point, here are a few recent premium rate increase filings from carriers in Connecticut:

Long-Term Care Rate Filing - Connecticut Life & Health Guaranty Association (Individual)

Rate request: 69 percent increase
Decision: Approved January 9, 2018

On May 25, 2017, the Connecticut Life & Health Guaranty Association requested an increase of 69 percent for long-term plans that had been issued by American Network Insurance Company (ANIC) from 1998 to 2008.

ANIC was placed into liquidation by a Pennsylvania court. As a result of the liquidation, state guaranty associations – consumer safety nets – are providing coverage for policyholders. There are 531 policyholders in Connecticut with ANIC long-term care plans, which are no longer being marketed.

The Connecticut Life & Health Guaranty Association requested the rate increase, saying it needed to establish premium rates that are reasonable in relation to the benefits provided and the current interest rate environment.

After an actuarial review, the Department determined that the experience of this block of business in both Connecticut and nationwide has deteriorated and will continue to worsen. Without a rate adjustment, the Association is expected to spend more than $1 on claims costs for every premium dollar it receives, far exceeding the 60 percent statutory minimum required by state law. As a result, the Department approved the rate increase request on January 9, 2018.

Policyholders will be offered different benefit options to mitigate the impact of a large premium increase. Under Connecticut law, increases equal to or higher than 20 percent must be phased in over three years or more.

Also worth noting: Apparently the state of Connecticut already had a 60% Medical Loss Ratio law in place long before the Affordable Care Act's 80% MLR rule (85% for large group plans) was put into place.

Long-Term Care Rate Filing - Massachusetts Mutual Life Insurance Company (Individual)

Rate Filing Request: 77 percent average increase
Decision: Under Review
Public Comment Period: May 30 to June 18, 2018

On May 24, 2018, Massachusetts Mutual Life Insurance Co. requested an average increase of 77 percent for individual long-term care plans. The plans were sold in Connecticut from 2000 to 2013 and are no longer being marketed.

There are approximately 1,000 policies currently in effect in Connecticut.

The company said in its filing that the increase is needed because of higher than expected claims costs and a longer duration of paying those claims that was anticipated when this product was originally priced.

Unlike medical health insurance with premiums set to cover expenses incurred only during the upcoming policy year, long term care premiums are set to cover expenses that are not expected to occur until a distant date, sometimes 20 years in the future.

The company noted it would offer its customers options to reduce or change benefits to offset the impact of an increase. Under Connecticut law, increases of 20 percent or higher must be phased in over three or more.

Hear that, folks? If you live in Connecticut and are one of the 1,000 policyholders (I'm assuming perhaps 1,500 actual enrollees?) enrolled in a long-term care plan from Massachusetts Mutual, you still have until June 18th to sound off about this 77% requested rate hike.

But wait, there's more. Check this one out:

Long-Term Care Rate Filing - MedAmerica Insurance Co. (Individual 1999-2004)

Rate request: 130 percent average increase
Decision: Disapproved, limited to a 15% increase on May 23, 2018.

On April 25, 2018, MedAmerica Insurance Company requested an average increase of 130 percent for individual long-term care plans. The plans were sold in Connecticut from 1999 to 2004 and are no longer being marketed.

There are approximately 30 policies currently in effect in Connecticut.

The company said in its filing that the increase is needed because of higher than expected claims costs and a longer duration of paying those claims that was anticipated when this product was originally priced. The company indicated it is seeking a rate increase on policies with compound inflation protection. No rate increase is requested on policies without inflation protection.

Unlike medical health insurance with premiums set to cover expenses incurred only during the upcoming policy year, long term care premiums are set to cover expenses that are not expected to occur until a distant date, sometimes 20 years in the future.

The company noted it would offer its customers options to reduce or change benefits to offset the impact of an increase. Under Connecticut law, increases of 20 percent or higher must be phased in over three or more.

After an actuarial review, the Department determined that while the company’s small, block of business in Connecticut is performing better than expected a small rate increase was warranted to cover the claims costs. As a result, the initial request was denied but the Department did approve a 15 percent increase on May 23, 2018.

The new rates take effect 60 days after the company notifies its customers.

Holy cats. They wanted 130%...and were approved for...15%.

Across all three companies, we're only talking about fewer than 1,600 policyholders...I'm guessing perhaps 2,400 total enrollees. Still, that's for Connecticut alone. Even if these represent the total number of Connecticut residents enrolled in these types of no-longer-offered long-term care policies, if you extrapolate it out nationally, that would be something like 220,000 people nationally.

For further reference, while don't know how much long-term care policies typically cost, this link suggested that it was around $1,400/year for a 55-year old...but that was as of 2012.

UPDATE: Commenter "M E" below provides some important context regarding these types of policies and the seemingly jaw-dropping rate hikes.