Dive Brief:
- UnitedHealth Group says its marketplace rates in New York were set too low because they anticipated market participation from the co-op Health Republic of New York, which has since failed.
- Plan rates, which were set through negotiations with state insurance regulators, were made with the assumption the co-op would be contributing risk-sharing payments.
- If the departure of a participant results in lower funds available to UnitedHealth, its ACA rates in New York may be insufficient, William Golden, UnitedHealth's northeast region CEO, stated last week.
Dive Insight:
Additional insurance executives also criticized the state's rate-review process, Bloomberg News reports. The issue raises some debate over the process of rate regulation.
Troy Oechsner of New York's Department of Financial Services defended the process, saying regulators use sound actuarial calculations in their rate controls. “We feel strongly that we did the right thing at the time, given the uncertainty of the market,” he was quoted by Bloomberg News.
However, uncertainty is precisely why the agency should have allowed insurers to set higher rates, UnitedHealth's Golden argues. “I would have loved to have sat in a room and said, ‘What’s your confidence level that these risk-adjustment payments would have been paid?’” he said.
The insurer had sought a 22% rate increase for its individual N.Y. marketplace plans but was only approved for a 1.65% increase.
The issue comes back to UnitedHealth's late 2015 statement it should have waited for more stability before entering the ACA market and that it is currently uncertain whether it will participate in 2017.