2014 CoOportunity Health RATE PROPOSAL

REVIEW DECISION
Issued October 8, 2014

Introduction
The Iowa Insurance Division (the Division) received an annual individual insurance
premium rate (ratefiling for CoOpportunity Health in June, 2014. In June, 2014,
CoOpportunity proposed a rate increase, varying by plan and region, effective January
1, 2015, of an average of 14.3%. This rate increase request was filed based on limited
claims data and experience. As experience developed, the carrier updated the data
and, on September 4, 2014, filed with the Division a supplemental request to revise its
initial rate request to an average of 19%, varying by plan and region, effective January
1, 2015. The original rate increase request for 2015 was based on claims experience
which lacked sufficient credible information on which to base trend estimates and
projected member movement from the entire insured and uninsured population. As
claims experience developed in 2014 and more data became available, the carrier
demonstrated that the claims experience is considerably higher than was projected in
the initial rates filed in 2013. Therefore, a significant portion of the rate request is due to
higher than expected claims experience.

Rate Filing and Review Procedure
Pursuant to a Governors directive from 2010, and in accordance with Iowa Code
section 505.15, whenever any health insurance company that conducts business in
Iowa submits a health insurance premium rate increase request to the Division, the
Commissioner must utilize an independent, qualified third-party actuary to conduct a
secondary review to determine the adequacy and appropriateness of the proposed
rate. The Division maintains a list of independent actuarial firms, and selected from
them NovaRest to perform the independent actuarial review. The report of NovaRest is
available on the Division website (as an attachment to the posted version of this Review
Decision at www.iid.iowa.gov). Specific tests and criteria used to determine the validity
of the request is outlined in each of the detailed reports. The independent review is
performed simultaneously with the statutorily required Division in-house review.
In addition, Iowa Code section 505.19 requires the Iowa Insurance Commissioner, (the
Commissioner) to hold a public hearing on a proposed health insurance rate increase
which exceeds the average annual health spending growth rate as published by the
Centers for Medicare and Medicaid Services of the United State Department of Health
and Human Services. The current rate is 6.1%. Prior to the public hearing, the
Consumer Advocate for the Division solicits and receives public comments on the
proposed health insurance rate increase. Those comments are posted online (as an
attachment to the posted version of this Review Decision at www.iid.iowa.gov).
A hearing on the proposed rate increase was held on Saturday, July 26, 2014, at 10:30
a.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 via
the Iowa Communications Network (ICN). The Divisions Consumer Advocate
presented public testimony on the written comments previously received from
consumers. The Commissioner took comments from policyholders and concerned
citizens present at the hearing. Comments also were received from citizens accessing
the hearing through the ICN sites.
The Commissioner reviewed the actuarial reports from NovaRest. In addition, the
Commissioner reviewed the comments made at the public hearing on July 26, 2014 and
the comments received through phone calls, mail and the internet to the Consumer
Advocate. The Commissioner also consulted with financial and actuarial staff within the
Division.

Consumer Concerns and Issues
The Consumer Advocate received 16 comments and concerns directly from
policyholders or members of the public. The reasons given for requesting a denial of
the proposed rate increase varied, but the most frequently cited reason was in regard to
affordability of health insurance and the inability to fit an increased cost of health
insurance into fixed budgets. Some comments reflected that people were
contemplating the possibility of dropping coverage due to the increase. Disappointment
was expressed regarding how soon after policies were issued that the rate increase was
needed. Some commenters questioned the effectiveness of the federal Patient
Protection and Affordable Care Act (ACA) and the long term ability of the law to
ensure affordable health care coverage.

Conclusion and Decision
The Division is mindful that several key provisions of the ACA went into effect in 2014
that impacted health insurance premium rates and pricing. As noted earlier, carriers did
not possess much claims data on these changes prior to formulating their rates for the
2014 enrollment season. Even at the time of this rate increase request for 2015, the
carrier did not possess much claims data. Some of the items impacting health
insurance premiums, beginning in 2014, include: insurers are not able to decline
coverage to applicants with pre-existing conditions; insurers are required to provide
plans with minimum essential health benefits that may be broader than benefits
provided under certain pre-ACA plans; and gender and health risks were eliminated as
rating 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 funding
from the federal government in the form of start-up and solvency loans. The
Commissioner reviewed the rate increase request keeping in mind the unique nature of
the organization, and its entrance into the market as a new player. The carrier does not
have 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 carrier
needing a larger rate increase than some competitors.
The Commissioner has reviewed the testimony of policyholders and consumers, studied
the actuarial reports, and consulted with various Division staff regarding the Wellmark
rate increase proposal. Whether to approve the rate increase is not a decision the
Commissioner has taken lightly. Thousands of Iowans will be impacted by this
decision. Balancing the needs of Iowa consumers and the solvency of an insurance
carrier must be weighed carefully.
The carrier demonstrated the need for higher rates, given the makeup of its
membership, higher utilization, and position in the market as a new entrant. The risk
mitigation tools (reinsurance, risk corridor, and risk adjustment) should help stabilize the
carriers 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 the
proposed individual rate increase filed by CoOportunity Health for implementation.


Dated October 8, 2014

Nick Gerhart
Commissioner
Iowa Insurance Division