The Department of Consumer and Business Services (DCBS), through its Insurance Division, reviews rates for individual and small employer health plans to ensure they are reasonable. That means rates are sufficient to cover costs so that insurers can pay claims, but not excessive.
Changes in recent years have brought transparency and stronger standards to the division’s rate review process. Key features of Oregon’s process include:
- Transparency. The division posts rate filings for individual and small employer health plans and all the information associated with the filings on www.oregonhealthrates.org. A required element of each filing is a consumer-friendly summary highlighting the insurer’s request and its five-year history of rate increases for that line of insurance. Insurers also must separately report and justify changes in administrative expenses and must provide more detail about what they spend on salaries, commissions, marketing, advertising, and other administrative expenses.
- All correspondence between the division and the company is posted online. When a rate is approved, the division posts a consumer-friendly summary on the website listing key factors underlying each decision.
- Public involvement. Once the filing is posted on the website, a public comment period begins. Comments are posted to www.oregonhealthrates.org. The division also holds public hearings, which are streamed online. Consumers can sign up to get emails about their insurer’s filings and public hearings if they want to watch and provide comments.
- Strong review standards. The division makes sure rates are actuarially sound and not excessive, inadequate, or unfairly discriminatory. The division can consider factors such as an insurer’s investment income, surplus, and cost-containment and quality-improvement efforts when reviewing a rate filing. It may also consider an insurer’s overall profitability, rather than just the profitability of a particular line of insurance.
- Consumer input. Using federal rate review grant funds, the division contracts with the Oregon State Public Interest Research Group (OSPIRG) to represent the public by choosing certain rate filings to review and participating in public hearings. This process began in 2011 and is expected to continue through at least 2015.
Health Reform and Impact on Rates
The implementation of the Affordable Care Act (ACA) prompted significant changes in rates and plan designs for 2014. With new consumer protections, plans cannot deny coverage for people with pre-existing conditions. Each plan must offer comprehensive coverage known as “essential health benefits” and cover preventive care at no out-of-pocket cost. There are caps on deductibles and other out-of-pocket costs. Also, the “age gap” has been narrowed so older adults cannot be charged more than three times the rate charged to the youngest adults.
Insurers filed 2014 rates at the end of April 2013, and, after two months of review and public hearings, the division ultimately lowered requested rates for individual plans from a few percentage points to 30 percentage points, depending on the company. For small employers, the Insurance Division reduced rates from requested amounts up to 12 percentage points.
2015 Rates
Insurers must submit rate filings by June 2, 2014, for individual and small group health plans that will be available to Oregonians in 2015. The filings will include plans that comply with the Affordable Care Act, as well as “transitional plans” and “grandfathered plans” that existed before the ACA.
More uniform benefits and price transparency have driven competition among insurers, which may be a factor in setting 2015 rates. Although insurers will have updated claims data, they will have limited information on the claims costs for plans that comply with the Affordable Care Act. This means that insurers will have to make projections about a number of factors, just as they did for 2014 rates. Other factors we expect insurers to consider include medical cost trends and the lesser impact of reinsurance in 2015. Since all rate filings are due at the same time, the division can more easily compare assumptions across the entire market and determine what is reasonable.
New this year, insurers must also report certain cost and quality metrics in their filings. Cost metrics include utilization and costs per member per month for emergency department visits, primary care visits, prescriptions, and other types of claims costs. Examples of quality metrics are breast cancer screening, diabetes care, and development screening for children. The division is collecting these metrics for informational purposes only this year, and they will be available for the public to view.
Timeline for 2015 Rate Filings
June 2, 2014: Rate filings for health plans due to the division
June 10, 2014: Rate filings and comparison tables available on www.oregonhealthrates.org
June 10, 2014-July 18, 2014: Public comment period
Late June-mid-July 2014: Rate hearings
Aug. 1, 2014: Division approves rates
Mid-August 2014: Final 2014 rates available on www.oregonhealthrates.org
Nov. 15, 2014: Open enrollment begins for 2015 plans
Learn More
Health Insurance Rate Review website:
Consumer Guide to Health Insurance Rate Review in Oregon:
http://www.oregonhealthrates.org/files/4961.pdf
