After Charlottesville earned the dubious distinction of having the most expensive health insurance premiums in the country, some of the area residents who couldn’t afford to pay $3,000 a month formed Charlottesville for Reasonable Health Insurance and retained a lawyer who’s made a career out of keeping insurance companies honest.
Washington, D.C., attorney Jay Angoff was hired to implement the Affordable Care Act in 2010, and before that he was the commissioner of insurance in Missouri. He has worked for Ralph Nader, and he published a landmark study in 2005 that showed how insurance companies artificially inflated malpractice insurance rates for doctors, which in turn increased prices throughout the system.
“He developed a reputation for using the legal system to fight for the little guy against Goliath insurance companies,” says the Washington Post.
And that’s why Sara Stovall and Ian Dixon are happy to have Angoff on their side.
“We’re hoping the name recognition of our attorney and the details our letter has” will get the Bureau of Insurance to take another look at Charlottesville’s rates, says Dixon.
Dixon created a GoFundMe account to raise money to pay for legal fees, and it’s reached $17,636 of its $20,000 goal.
On January 4, Angoff sent a nine-page letter to the Bureau of Insurance detailing ways Optima Health calculated its premiums here that he says are “excessive” and even a violation of federal law.
For example, Charlottesville has a rating factor of 1.579 that far exceeds any other geographic area in the state and that of other carriers, which use 1.07 or lower for this area. Optima executives told Stovall and Dixon that rate was in part because of “the relative health of the population that’s buying.”
And consideration of morbidity in determining that rating factor “violates federal law,” Angoff writes to Virginia’s commissioner of Insurance Jacqueline Cunningham.
Optima spokesperson Kelsea Smith says, “We did not violate the guidelines” and comments the company did “are simply false.”
Angoff also points out that Optima’s own rating factor to insure small groups in Charlottesville is .937, a difference that “would seem to have no rational basis.”
Angoff calls Optima’s 8 percent profit factor in its individual premium rates “unjustifiable” for a nonprofit. And because Optima uses a 5.7 profit for its small group rates, individual policyholders may be subsidizing small group policyholders, says Angoff. He suggests the bureau “may wish to consider whether such a strategy could reasonably be considered unfair discrimination.”
The profit margin “was merely an estimate,” and Optima has lost $32 million over three years on the exchange, says Smith.
Angoff notes that Optima’s ownership of Martha Jefferson Sentara should enable it to negotiate favorable terms for those it insures and to provide leverage with UVA Health System, which Optima has claimed charges higher rates and is more expensive to cover.
That allegation drew a letter to the Post from Richard Shannon, UVA executive vice president for health affairs, who disputes Optima’s assertion that UVA is the reason premiums skyrocketed. He says Optima clients account for fewer than 1 percent of commercially insured patients cared for at UVA, and “Sentara has the opportunity to benefit from these higher premiums while paying itself as a care provider.”
Shannon also takes issue with Optima’s claim that Charlottesville is a high-cost region for health care, and cites a 2015 New York Times article that puts this area 85th lowest among 306 hospitals nationwide for commercially insured beneficiaries.
The challenge could be a first. Dixon says he’s “not aware of a consumer who’s challenged an insurance company on its rates.” And some of the details brought out in Angoff’s letter “are a hard thing for the Bureau of Insurance to dismiss,” he says.
At press time, the Bureau of Insurance had not responded to the letter. “We’re super impatient,” says Stovall. At the same time, she realizes, “We need to give the bureau the space and time to do their investigation.”
In her dream scenario, she hopes “it will motivate the bureau to take immediate action and modify the rates,” she says.
And there’s some urgency for those who lost coverage when their provider pulled out of the area. “Everybody using the Affordable Care Act before qualifies for a special enrollment period until March 2,” says Stovall. “We’re still mad as hell about it and because there’s this special enrollment period, we feel like this is something we can fight for,” says Dixon.
Stovall sees longer-term damage from the tripled health insurance premiums, which could deter someone considering starting a small business and could set a precedent for another insurance company to use the rates as a basis for setting its own.
Says Dixon, “Anyone coming to this area could say this is a very expensive area.”