As insurers seek CT rate hikes, Congress is increasing healthcare benefits

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Congress on Friday passed the Democrats’ major bill aimed at reducing inflation, which will partially reduce healthcare costs for those enrolled through the Affordable Care Act and Medicare. But while Connecticut lawmakers praised the federal relief, they also raised concerns about proposed rate hikes that could hurt plans for thousands of people in the state.

Connecticut Democrats are celebrating the Inflation Reduction Act after more than a year of negotiations for legislation that has taken many different forms, including an overhaul of tax policy and climate change provisions. But while Americans may see some tangible benefits in the near future, many of the health-related programs will have a much slower phase-in.

The most immediate benefit is the extension of the Affordable Care Act’s expanded subsidy for three years. That boost was created under the Democrats’ federal pandemic relief plan in 2021 — America’s bailout plan — and was due to expire in late 2022 to Social Services Commissioner Deidre Gifford.

The implementation of the remaining components of the healthcare system will take several years. The law will affect thousands of Connecticut residents enrolled through the state exchange — Access Health CT — as well as seniors on Medicare.

The bill also allows Medicare to negotiate prescription drug prices for the first time in history. It will initially apply to 10 drugs from 2026 and then the number will increase every year until 2029. The law will also limit out-of-pocket prescription drug costs to $2,000 per year by 2026. About 19,000 people in Connecticut currently spend more than $2,000 out of pocket annually.

Drug companies have argued that this will stifle innovation and new drug development, but Gifford cited the Congressional Budget Office report saying it will not have a “material impact” on new drugs over the next three decades.

While those measures will take much longer, drug companies will have to pay Medicare a rebate starting next year if costs rise more year over year than the rate of inflation. According to Gifford, there are 700,000 people in Connecticut who receive health care through Medicare.

Legislation attempted to limit insulin co-payments to $35 a month, but enough Senate Republicans voted to block them from applying to people with private insurance. Now the copayment cap applies only to Medicare beneficiaries who need the diabetes drug, which Gifford said will start in 2025 and cover about 35,000 people in the state.

Connecticut has its own law that limits self-service insulin prices to $25 per month. It applies to some residents who have private insurance, such as those who are enrolled through the state exchange, but not those who have plans that are federally regulated.

However, as Congress expands some health-related benefits, state officials are concerned about potential rate hikes that insurers are targeting, which represent an average 20.4% increase on next year’s individual health plans.

The Connecticut Department of Insurance will review proposed rates for 2023 at a meeting on Monday. The agency says the plans in question cover about 206,000 residents in the state. Members of the public can watch or attend the high-profile meeting in Hartford, and officials can ask questions of insurers. The Department of Insurance is expected to decide in September whether to accept them, approve a smaller increase, or reject them outright.

“This should be a time for the people of Connecticut to get an explanation as to why premiums have to be so high,” Connecticut health attorney Ted Doolittle said in an interview.

“The insurance department is under a lot of pressure to make sure rates are as low as possible,” added Doolittle. “The burden of proof is on insurers to show why the price they are charging is low and unavoidable.”

At a news conference on Thursday touting the healthcare benefits of the Inflation Reduction Act, Lamont said the insurance department would review carriers’ claims “very thoroughly and rigorously.” The federal law could relieve the hospitals, which in turn pass on the costs to the insurers.

“For example, I like to think of this anti-inflation law that reduces the number of uninsured. That’s less of a cost that hospitals now have to bear,” Lamont said. “That can reduce demand from insurance companies.”

“We still have a long way to go in terms of inflation, but I think the Inflation Reduction Act will make a big difference, and not just this year, but at least for the next few years,” he added.

As part of the justification for rate hikes, some of the insurance companies, including ConnectiCare, pointed to the expected elimination of ACA subsidies, which were due to be phased out by 2023. ConnectiCare, which only sells individual plans on the state stock exchange, is targeting an average increase of 25.2% for plans that currently cover 8,782 people.

Kimberly Kann, a ConnectiCare spokeswoman, said in a July statement that there were legal and regulatory factors outside of the company’s control, such as the expected phasing out of expanded ACA subsidies by the end of the year.

“Our proposed rates are based on several factors, including medical and pharmacy cost trends, along with the ongoing impact of COVID-19 on our members’ use of services, including the use of delayed supplies,” Kann said at the time.

“The legal and regulatory environment also continues to present the market with challenges beyond the Company’s control, including the loss of enhanced Advanced Premium Tax Credits granted by the American Rescue Plan Act, which expires in 2022, and state-mandated benefits ‘ she added.

But Blumenthal and other critics took that argument apart at a news conference Friday morning, as Congress eventually passed legislation extending those subsidies for a few more years. They also cited record insurance company profits as a reason for the insurance department to reject the proposed increases.

“The proposal for this huge rate hike collapses like a house of cards at the slightest scrutiny,” Blumenthal said. “If you look at the basis for this, insurance companies are assuming that if Congress literally today gives final approval for that extension to 2025, there will be no extension of the current subsidy. … And yet the insurance companies are counting on the Congress failing. ”

While Lamont and other state officials have focused specifically on the health regulations, the Anti-Inflation Act is also one of the most accommodative climate laws in recent history, providing tax incentives for clean energy production and electric vehicle purchases.

The bill passed the tightly divided Senate on Sunday, prompting the House of Representatives to return to Washington from its month-long hiatus. The House of Commons approved the law in an internal party vote on Friday evening.

While the bill’s main purpose is to reduce inflation, it left out many Democratic priorities in an attempt to reach an agreement with key negotiators. A major concession was the inclusion of early education and family-related programs such as child care grants, a national paid leave program, universal pre-kindergarten and continued monthly payments of enhanced child tax credits.

Republicans have strongly opposed the legislation, citing some reports from economists that it will have little to no impact on reducing inflation.

“Biden-Blumenthal inflation is hurting Connecticut, and this latest gargantuan spending package is another example of Democrats putting extremist progressive politics ahead of the welfare of the American people,” newly minted GOP Senate nominee Leora Levy said in a statement.

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