In this rate filing, United HealthCare does not appear to justify the proposed 16.8% increase. While it provides an overall medical trend and a few specific increases due to benefit changes, there is no calculation showing exactly why they propose to increase rates 16.8%. The filing also does not appear to offer adequate information to support the medical trend calculation.
United HealthCare does offer justification for a 0.25% increase due to extending dependent coverage to age 26, and a small factor increase to extend 100% preventive care coverage to all enrollees. United HealthCare has also justified a 4% decrease in one geographic rating factor due to lower provider payment rates.
United HealthCare’s rate filing details the insurer’s efforts to control medical cost while improving quality, including strategies to promote evidence-based medicine, and other efforts to improve outcomes for patients. The insurer participates in the Robert Wood Johnson Foundation Aligning Forces for Quality project and provides data on quality to the Oregon HealthCare Quality Corporation, and is also part of several other Oregon quality efforts. According to the filing, this will reduce claims costs by $9.40 per member per month in 2011, but the insurer does not explain how this reduction impacts their medical trend estimate, or the degree to which consumers will share in these savings.
Administrative expenses under the proposal would increase by the same rate as the overall proposed increase – 16.8%. This increase is not justified in the rate filing. Of particular concern is the fact that sales commissions are the second highest category of administrative costs listed for 2009, making up 23.47% of non-claim administrative costs. The amount paid for commissions is set to increase under the insurer’s 2010 budget.
The proposed increase is troubling in terms of affordability for small businesses and consumers, and because of that, the insurer risks losing enrollment. The insurer did not evaluate the estimated change to enrollment due to the rate increase of 16.8%, and this is problematic.