State legislators will seek a deeper understanding of what goes into the insurance rate-setting process as the legislature this year tackles high health insurance premiums on the individual market.
Bills heard in the House Health and Government Operations Committee and Senate Finance Committee Wednesday would change what factors the Maryland Insurance Commissioner must look at when considering rates.
As the legislature looks at possible solutions to the rising premiums, including a reinsurance program, that information could be critical.
“We have a heavy lift this year and getting us prepared for that is going to be very important,” said Del. Shane Pendergrass, D-Howard and chair of the House committee. “This is going to be like a series of tutorials, and this bill fits right in with the things that we are going to be looking at.”
The bill would require the insurance commissioner to consider how high-risk members affect premiums; the impact of programs to improve health outcomes and lower costs; and the statutory requirements nonprofit insurers like CareFirst BlueCross BlueShield have to follow.
Currently, the commissioner must consider five factors in considering rates: past experience; underwriting practice and judgment; making sure insurers maintain a reasonable reserve; past and future expenses; and any other relevant factors in and outside the state.
Based on that last factor, insurers, including CareFirst have opposed the current legislation.
“The commissioner has the ultimate authority to ask for information that he or she thinks is relevant,” testified Deborah Rivkin, vice president of government affairs for CareFirst. “It’s important for the insurance commissioner to have the most flexibility possible.”
Adding more requirements could hamper that flexibility, she said.
But the bill’s proponents said a potential change in insurance commissioners could also change what factors are considered. The current commissioner, Al Redmer, is currently running for Baltimore County executive.
The information the bill requests could help determine how Maryland responds to the high premiums, especially whether the state adds a reinsurance program. Reinsurance allows insurers to pass off claims above a certain threshold, say $50,000, to a reinsurance pool that would pay instead of the carrier.
“Reinsurance is probably one of the routes we are going to go,” Sen. Thomas “Mac” Middleton, D-Charles and the bill’s Senate sponsor, said during the hearing. “All of this information is going to be very important to us.”
But the insurance administration already collects most of this information and has done analysis on what reinsurance would look like, said Todd Switzer, the agency’s chief actuary.
Instead, the bill’s issue could be one of transparency. The administration now makes all of the information related to insurance requests available either online or after receiving a public information request.
Some of that information can be difficult to access and understand. Much of the communications and requests for information between the administration and the carriers is posted online.
Yet what’s available can be difficult to pore through, said Beth Sammis, president of Consumer Health First and a former interim insurance commissioner, who said it took her two days to go through the information.