Good Work from the Times on Rate Increases

Shedding light on insurance company secrets

Proving that not every story has to be a zillion words long or analyze a zillion data points to break important news, The New York Times produced a dandy little exposé this week about New York’s health insurers. It seems insurers don’t want the public to learn why they are seeking stratospheric rate increases. As part of the state’s rate review process, the carriers—some of them household names like Aetna, Empire Blue Cross, UnitedHealth/Oxford, and Connecticut General—have sent memos to state insurance regulators justifying their requests for rate hikes. The Times’s Nina Bernstein is on the case, reporting that the state superintendent of financial services, Benjamin Lawsky, has ordered that the memos be made public.

The carriers say no dice, and have sent letters to the superintendent arguing that what they have disclosed in their memos are trade secrets. In other words, Empire worries that Aetna will learn about the claims experience, company profits, and other factors that go into a rate increase. According to the Times, Aetna warned that disclosure will cause “substantial and irreparable injury to Aetna.” Independent Health, based in Buffalo, claimed it had spent “well over $700,000 developing the trade secret documents” and said the value of keeping them secret was much higher. UnitedHealth/Oxford told the state that “this matter is of critical importance to us.”

Other companies contend the memos are too technical for consumers to understand. A lawyer for some of the carriers claimed “these documents, often speaking of concepts such as morbidity and anti-selection, could cause not only confusion, but also unnecessary alarm to the layman policyholder.” How many times have I heard the argument that consumers are too dumb to get it?

New York policyholders are getting it. Since lawmakers gave regulators new power to reject rate increases for individual and small group policies, Bernstein reported that protests from consumers have flooded state offices. Double-digit rate increases are tough to handle in the family budget. A sixty-one year old woman told the state that Aetna wanted to raise her almost-$2000 monthly premium as much as 19.7 percent: “I worry every day how I will keep a roof over my head in the future.” She said her teeth were “all broken,” and she couldn’t afford to fix them because all her dollars were going to Aetna. “So you actually could say that I am neglecting my health in order to be able to pay for my insurance.” The Times offered more proof the day before, when its Gotham columnist, Michael Powell, reported the financial troubles of a minimum-wage worker who had dropped her insurance because she couldn’t afford it. She told Powell: “It’s disgusting to choose between health and enough money to live.”

Lawsky’s decision to make the memos public takes effect by the end of November unless the companies seek a court injunction. In Maine, insurance giant WellPoint used the courts to do an end run around the insurance superintendent; it would not be surprising if New York’s carriers do the same.

Campaign Desk has been urging more press scrutiny of insurance rates, and the Times’s story is just the kind we like to see. It provides a look at the arcane process of setting insurance rates that affect almost every New Yorker. And it tackles secrecy in the corporate world, which often takes a back seat to secrecy in government. Transparency and tough regulation were part of the rhetoric advanced by the advocates of reform, including those in the Obama administration, and the public had high expectations things would be different. It’s still an open question whether rhetoric will match reality. We need the press to give us the answer.

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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: , , , ,