A Rate-Regulation Case Study in Pennsylvania

When insurance rates are news—and when they are not

What’s so interesting about insurance rate regulation, and why is it worth reporting on? The topic has everything to do with the ultimate fate of the national health reform law and the media’s unfortunately diminishing role as a watchdog over state government. Campaign Desk has kept an eye on rate coverage in hot spots like Maine, California, and Connecticut, where insurance companies have won important battles. Now, in Pennsylvania, they have triumphed once again.

A few days ago, lawmakers in Harrisburg okayed legislation touted as a way to fix a gap in Pennsylvania’s health insurance laws. The bill extends rate regulation to policies that all companies sell to small employers, a step Pennsylvania needed to take in order to bring the state in compliance with the health reform law. Before passage, the insurance commissioner could not review the rates of policies that for-profit carriers like Aetna and Cigna sold to these employers. So a law that brings them under the regulatory umbrella is a good thing, right? The feds think so, and even the industry likes the change. A spokeswoman for Independence Blue Cross told the Philadelphia Inquirer: “We support the legislation. These bills create the ‘effective rate-review process’ in Pennsylvania that is envisioned with the federal reform law.”

But wait, there’s more to tell. Lawmakers weakened the regulatory process itself by eliminating the insurance commissioner’s authority to approve rate increases. Under the old law, a company wanting to raise rates more than ten percent had to obtain the commissioner’s approval or disapproval, which he or she was required to give. Rate increases of less than ten percent had to be filed and reviewed, but did not need the commissioner’s approval or rejection. Review is a less forceful regulatory tool than approval.

In the new regulatory scheme, however, rate increases greater than ten percent would be reviewed, but the commissioner will not be required to approve them before a company can start using them. The commissioner can either approve the increases or deny them, at his or her discretion. If the commissioner takes no action after forty-five days, the increases will automatically take effect. Rate increases of less than ten percent do not even need the review that they had under the old law. A company can simply begin to use the rates after it files them with the state. In practical terms, that means companies can pile on a series of increases—each totaling no more than 9.9 percent—with little state scrutiny.

What can the public—or, in this case, small business owners—say about this? Not much, it turns out. The new law provides no way for the public to ask for a hearing on a rate increase. The old one didn’t, either, and consumer advocacy groups around the country, including the PA HealthAccess Network, have made this a fighting issue. “The new law says that the only party that can ask for a public hearing is the insurance company. Small business owners who pay the rates cannot do that,” says Athena Ford, a spokeswoman for the Network. The new law requires that any rate request greater than ten percent be posted on the Insurance Department’s website, so at least the media and the public can find out what companies are up to.

The press paid scant attention to this legislation before it passed and afterward. An AP story after the bill passed was brief and perfunctory, and didn’t get the gist of what had happened. The writer did not understand the difference between rate review and rate approval, and what each means for policyholders. Stories published before final passage in the Inquirer and the Wilkes-Barre Times Leader were misleading. Why the poor press showing? Rate regulation is tricky stuff, and often boring, and covering it doesn’t pack the same professional punch as, say, covering a new drug to cure cancer. To get press notice, health reform stories often need obvious victims and villains to produce some drama.

There were villains and victims aplenty in Pennsylvania earlier this year, and the press was on the stories when the state threw some 42,000 people with low incomes off a special program called Adult Basic that offered coverage at low prices so that people with chronic conditions could see doctors when they needed to. They were on the case when Highmark, a Blue Cross Blue Shield plan in western Pennsylvania, announced a rate increase of 9.9 percent on special policies with more limited coverage sold to those stranded when the state ended their Adult Basic plans. Headlines such as “Highmark set to raise low-income plan rates,” in the Pittsburgh Post-Gazette; Blue Cross seeks to increase rates for low-income, elderly clients,” in the Williamsport Sun-Gazette; and “Blue Cross seeks rate hike for insurance products for low-income members,” in the Scranton Times Tribune showed that low income people (the victims) and Highmark (the villain) made good copy. Press coverage as well as advocacy activities undoubtedly helped Highmark change its mind and revise its rate request to only 4.9 percent. (These are policies sold to individuals that are subject to rate approval.)

The Highmark case shows the power of the press when they practice what is now called “accountability” journalism. That’s the old-fashioned stuff that some of us cut our teeth on when newspapers were robust purveyors of the news. No matter what it’s called, the Pennsylvania tale shows why we have to be watchdogs for the public in matters of health insurance now and in the future, and why we have to learn how to decipher arcane rate requests, no matter how complicated. If the state won’t protect their interests, then the job falls to us.

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Trudy Lieberman is a longtime contributing editor to the Columbia Journalism Review. She is the lead writer for The Second Opinion, CJR's healthcare desk, which is part of our United States Project on the coverage of politics and policy. She also blogs for Health News Review. Follow her on Twitter @Trudy_Lieberman. Tags: , , , , ,