2014 cooportunity health rate proposal iowa

8/11/2019 2014 CoOportunity Health Rate Proposal Iowa

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2014 CoOportunity Health RATE PROPOSALREVIEW DECISION

Issued October 8, 2014

Introduction

The Iowa Insurance Division (the Division) received an annual individual insurancepremium rate (ratefiling for CoOpportunityHealth in June, 2014. In June, 2014,CoOpportunity proposed a rate increase, varying by plan and region, effective January1, 2015, of an average of 14.3%. This rate increase request was filed based on limitedclaims data and experience. As experience developed, the carrier updated the dataand, on September 4, 2014, filed with the Division a supplemental request to revise itsinitial rate request to an average of 19%, varying by plan and region, effective January1, 2015. The original rate increase request for 2015 was based on claims experiencewhich lacked sufficient credible information on which to base trend estimates andprojected member movement from the entire insured and uninsured population. Asclaims experience developed in 2014 and more data became available, the carrier

demonstrated that the claims experience is considerably higher than was projected inthe initial rates filed in 2013. Therefore, a significant portion of the rate request is due tohigher than expected claims experience.

Rate Filing and Review ProcedurePursuant to a Governors directive from 2010, and in accordance with Iowa Codesection 505.15, whenever any health insurance company that conducts business inIowa submits a health insurance premium rate increase request to the Division, theCommissioner must utilize an independent, qualified third-party actuary to conduct asecondary review to determine the adequacy and appropriateness of the proposedrate. The Division maintains a list of independent actuarial firms, and selected fromthem NovaRest to perform the independent actuarial review. The report of NovaRest isavailable on the Division website (as an attachment to the posted version of this ReviewDecision atwww.iid.iowa.gov). Specific tests and criteria used to determine the validityof the request is outlined in each of the detailed reports. The independent review isperformed simultaneously with the statutorily required Division in-house review.In addition, Iowa Code section 505.19 requires the Iowa Insurance Commissioner, (theCommissioner) to hold a public hearing on a proposed health insurance rate increasewhich exceeds the average annual health spending growth rate as published by theCenters for Medicare and Medicaid Services of the United State Department of Healthand Human Services. The current rate is 6.1%. Prior to the public hearing, theConsumer Advocate for the Division solicits and receives public comments on theproposed health insurance rate increase. Those comments are posted online (as anattachment to the posted version of this Review Decision atwww.iid.iowa.gov).

A hearing on the proposed rate increase was held on Saturday, July 26, 2014, at 10:30a.m. at the Mercy College of Health Sciences, Sullivan Center, Des Moines,Iowa. Access to the hearing was made available at six locations around the state viathe Iowa Communications Network (ICN). The Divisions Consumer Advocatepresented public testimony on the written comments previously received fromconsumers. The Commissioner took comments from policyholders and concerned
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citizens present at the hearing. Comments also were received from citizens accessingthe hearing through the ICN sites.The Commissioner reviewed the actuarial reports from NovaRest. In addition, theCommissioner reviewed the comments made at the public hearing on July 26, 2014 andthe comments received through phone calls, mail and the internet to the Consumer

Advocate. The Commissioner also consulted with financial and actuarial staff within theDivision.

Consumer Concerns and IssuesThe Consumer Advocate received 16 comments and concerns directly frompolicyholders or members of the public. The reasons given for requesting a denial ofthe proposed rate increase varied, but the most frequently cited reason was in regard toaffordability of health insurance and the inability to fit an increased cost of healthinsurance into fixed budgets. Some comments reflected that people werecontemplating the possibility of dropping coverage due to the increase. Disappointmentwas expressed regarding how soon after policies were issued that the rate increase was

needed. Some commenters questioned the effectiveness of the federal PatientProtection and Affordable Care Act (ACA) and the long term ability of the law toensure affordable health care coverage.

Conclusion and DecisionThe Division is mindful that several key provisions of the ACA went into effect in 2014that impacted health insurance premium rates and pricing. As noted earlier, carriers didnot possess much claims data on these changes prior to formulating their rates for the2014 enrollment season. Even at the time of this rate increase request for 2015, thecarrier did not possess much claims data. Some of the items impacting healthinsurance premiums, beginning in 2014, include: insurers are not able to declinecoverage to applicants with pre-existing conditions; insurers are required to provideplans with minimum essential health benefits that may be broader than benefitsprovided under certain pre-ACA plans; and gender and health risks were eliminated asrating factors and limits were placed on age rating.CoOportunity Health is a new entrant in the Iowa and Nebraska health insurance

market. It is one of many Consumer Operated and Oriented Plans (CO-OPs)established by the ACA. CoOportunity Health is a non-profit organization with fundingfrom the federal government in the form of start-up and solvency loans. TheCommissioner reviewed the rate increase request keeping in mind the unique nature ofthe organization, and its entrance into the market as a new player. The carrier does nothave legacy (non-ACA-compliant grandfathered or transitional plans or large group)plans to supplement any rate impacts, unlike its competitors. This fact led to the carrierneeding a larger rate increase than some competitors.The Commissioner has reviewed the testimony of policyholders and consumers, studiedthe actuarial reports, and consulted with various Division staff regarding the Wellmarkrate increase proposal. Whether to approve the rate increase is not a decision theCommissioner has taken lightly. Thousands of Iowans will be impacted by thisdecision. Balancing the needs of Iowa consumers and the solvency of an insurancecarrier must be weighed carefully.


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The carrier demonstrated the need for higher rates, given the makeup of itsmembership, higher utilization, and position in the market as a new entrant. The riskmitigation tools (reinsurance, risk corridor, and risk adjustment) should help stabilize thecarriers rates through 2016.The Commissioner finds that there is no evidence that the proposed rate filings are

discriminatory or excessive under Iowa law. The Commissioner therefore approves theproposed individual rate increase filed by CoOportunity Health for implementation.

Dated October 8, 2014

Nick GerhartCommissionerIowa Insurance Division

2014 cooportunity health rate proposal iowa

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