By Angela deMello
“When rates go so high that customers simply decide they can no longer afford the product and leave the market altogether, then it is a market failure…”
Angela deMello, Connecticut small business owner, testified at the August 3 public hearing opposing Anthem’s request for a 2017 health insurance rate increase.
She wanted to share her perspective as a hands-on insurance broker about the impact of increasing costs on the people she deals with day-to-day.
The following are abridged excerpts from Angela’s written testimony.
Affordability in the changing health care landscape
Our Agency, The Strategies Group, handles health insurance for individuals, small and large employers, as well as Medicare recipients. We have been in the industry for 25+ years and have experienced many changes and challenges to our healthcare landscape in CT.
The Affordable Care Act (ACA) has definitely brought many positive changes, the biggest of which, in my opinion, has been the elimination of pre-existing conditions as barriers to insurance. It has also been heartwarming that so many of my clients and their families have been able to see doctors for the first time in many years, or ever. Subsidies (Advanced Premium Tax Credits) have made that possible.
However, the majority of my clients have not experienced this opportunity. According to the ACA guidelines, they make too much money to get subsidies. And most of them are now paying much higher premiums than they were before. While the aim of the ACA was to make insurance more accessible, coverage is now definitely NOT affordable to the average consumer.
Individuals and small businesses respond to higher costs
Many of our individual and small business clients are paying the penalty for going without coverage rather than pay rising insurance premiums. Their rationale is simple – do we pay insurance premiums or put food on our tables, or pay the mortgage? For many small businesses, it is a choice between paying insurance premiums or paying payroll.
The plan to pay the penalty may be a challenge, however, I do not perceive that to be the main challenge. The bigger, more insidious challenge is that, without insurance, hospitals and providers are, by law, able to collect the full cost for services provided. There is no “middle man” insurance company that can negotiate claims.
Market success or bust?
I understand that the definition of “affordable” is based in actuarial projections of the solvency of the insurance carriers, rather than the affordability to the consumer. While that may be the letter of the law, I am appealing to you, the Insurance Department, to take into consideration, the spirit and intent of the law.
I have always understood it to be the Insurance Department’s job to encourage, manage, and regulate a competitive insurance market in the state. That is where the actuarial metrics of excessive, inadequate, and discriminatory come from – which is intended to keep insurance companies solvent, reasonably profitable, and to not overcharge certain segments of the state’s population unfairly while undercharging others.
When rates go so high that customers simply decide they can no longer afford the product and leave the market altogether, then it is a market failure — one that government intervention and regulation is meant to prevent. Sadly, this is what we are seeing on the horizon for 2017, with these enormous rate increases, and with the shutting down of Healthy CT (the state’s only nonprofit insurance co-op), making the market less competitive and the costs prohibitive for many people to participate at all.
As such, Connecticut Insurance Department does need to take affordability into account as it looks forward, lest it have an even broader market failure to try to correct in a year from now.
I realize that you as the Insurance Department, probably field the same challenges. However, laws were made by people like you and I, sitting across a table from one another, and making decisions that would improve the lives of our communities and fellow beings.
Are you a small business owner in Connecticut? Do you have a story like Angela’s?
Are you willing to share your story about rising health care costs?
We want to hear your health care story!
Contact Stephanye at email@example.com today!