Overview Medical Loss Ratio (MLR) Rate Review

United Security Life and Health Insurance Company Rate Review in Indiana

United Security Life and Health Insurance Company has asked for a rate increase* for the following products in Indiana: Protector Plus-PPO-Individual-90535IN001, Advantage Care HSA-PPO-Individual-90535IN016 and Apex-Indemnity-Individual-90535IN017.

Review Status: Pending Review

If the increase happens:

The average rate increase will be 24.80%
The proposed rate increase is an average rate increase for all covered groups or individuals. The premiums may be higher or lower than this average based on factors such as age, family structure, and health experience of the covered groups and individuals.
The effective date of the rate increase is 01/01/2012. The actual date of your rate increase may vary based on the anniversary date of your policy and other factors.
This increase will affect 1198 people

* This posting does not mean that the requested increase is unreasonable. Either the state or federal reviewer will decide that and the decision will be posted here.

More Information about this Rate Increase:

Why does my insurance company want to raise my premium?
What kinds of Medical Services are causing this rate increase?
How would my insurance company use my premium?
Last three rate increases for this product
Who is reviewing this rate increase?
Insurer's explanation of the rate increase

Why does my insurance company want to raise my premium?

Your insurer says that costs are going up:

Type of Cost:	Per Member Increase Per Month Increase**	Portion of Increase
Medical Services* - Cost of providing healthcare services to policyholders	$72.78	71.50%
Administrative Expenses - Marketing, claims processing, and other costs to the company	$29.01	28.50%
Underwriting Gain/Loss - Amount the company keeps after paying claims and administrative expenses	$0.00	0.00%

* 74.00% of the Medical Services cost increases are due to how many people use the services and how often they use them and 20.80% is due to the cost of services.

** These increases won't add up to the average rate increase if everyone doesn't get the rate increase at the same time.

What kinds of Medical Services are causing this rate increase?

Medical Service	Per Member Per Month Increase	Portion of Increase
Hospital Inpatient - Care in a Hospital	$0.00	0.00%
Outpatient - Care in a hospital or other facility that doesn't require an overnight stay	$0.00	0.00%
Professional Services - Payments to doctors and other healthcare professionals	$0.00	0.00%
Prescription Drugs - Medicines you need a prescription to buy	$0.00	0.00%
Ancillary Services - Medical supplies, ambulance fees, etc.	$88.41	121.47%
Capitation - A fixed per person payment the insurer pays to a provider to cover a person's medical costs	$0.00	0.00%
Cost Sharing - Changes in deductibles, copayments, benefits, etc.	$0.00	0.00%
Current Medical Cost Adjustment - The difference between what your insurer thought it was going to pay for medical services and what it actually paid during the current year	-$15.62	-21.47%
Total Medical Service Cost Changes	$72.78	100.00%

How would my insurance company use my premium?

Type of Cost	How Premium Dollars Will be Spent if the Requested Rate is used
Type of Cost	Per Member Per Month	Portion of Rate
Medical Services - Cost of providing healthcare services to policyholders	$422.02	71.50%
Administrative Expenses - Marketing, claims processing, and other costs to the company	$168.22	28.50%
Underwriting Gain/Loss - Amount the company keeps after paying claims and administrative expenses	$0.00	0.00%
Total Request Rate	$590.24	100.00%

Last three rate increases for this product:

Year	Requested	Got
2011	23.10%	23.10%
2010	28.30%	28.30%
2009	21.00%	21.00%

Who is reviewing this rate increase?

The rate increase request is being reviewed by the State.

State laws either:

Allow the insurance regulator to review rate filings, but do not allow the regulator to stop a rate from being used, or
Allow the insurance regulator to both review rate filings and stop an unreasonable rate from being used.

If a state's laws do not allow the insurance regulator to perform effective rate reviews, the federal government* will review any rate increases at or above 10% in the individual or small group market.

*If the federal government is reviewing, click here to see the filing.

Insurer's explanation of the rate increase

United Security Life and Health Insurance Company has prepared the following written explanation of this rate increase.

This rate increase, which will be effective 1/1/12 on a closed block of 1,198 Indiana policies, is being implemented to adjust for the continually increasing cost of medical care and the associated administrative expenses. Rate actions from 12%-35%   (plus the normal annual adjustment for an increase in age) are being implemented. These rate actions vary by plan type: Traditional, PPO or HSA qualified.

Recent experience of this block of business has been unfavorable and the rate increases are necessary to keep up with constant increases in the cost of medical care, as well as to return the rates to the appropriate level. The main driver of increases in medical care cost is medical trend.  Trend has two components. First, there is the increase in cost of a given medical service (a day in the hospital, a visit to a doctor or a medical test). The second part of trend is utilization, or the increased use of medical services. The big driver of the increased utilization is the greater availability of advanced medical treatments and improved public awareness and access to medical screenings to detect serious, often chronic, conditions needing treatment. Another factor in individually underwritten business is the wearing off of the effect of the initial underwriting, which causes claims to go up quicker than expected. Recent federal legislation has also mandated benefits that will increase future costs. Benefit mandates, such as no benefit maximums, virtually complete preventive care coverage and no pre-existing limits for children coverage, will cause significant increases in claims.

The other component of a rate besides the cost of claims is administrative costs. We have been working hard to lower expenses and despite recent reductions in the size of the company corporate expenses are  predicted to remain a constant percent of premium for the next year. The main drivers of expenses include general inflation, personnel salaries and benefits, rent, broker commissions and the cost of complying with ever increasing government regulation.

Comment on this rate increase

You may submit your comments about this rate increase to Indiana on its web site at http://www.in.gov/IDOI/RateWatch/HealthFilings.aspx.