Montemayor's Rate Increase

June 25, 1999

To Michael Totty, Editor, Texas Journal:

Commissioner Montemayor’s June 23 letter defending his grant of a 20% increase for the health insurance risk pool demonstrates a lack of compassion for sick Texans and a multi-million dollar handout to insurance companies.

The facts are simple and undeniable: the insurer asked for a 10% rate increase, and after the Department got involved, consumers got stuck with a 20% rate increase. All the Commissioner’s rationalizations and misstatements notwithstanding, his regulation of health insurance rates did nothing but provide insurers with twice the rate increase they requested. The result is that sick Texans, who already pay high health insurance rates, may not be able to afford the health insurance they desperately need.

The Commissioner tried to rewrite history to justify his approval of the 20% rate increase. Documents obtained through open records requests confirm the following inaccuracies in his letter. First, a March 5 memo establishes that the TDI actuary did not "immediately" see a problem with a 10% increase, but initially reviewed the filing and told the Pool that she expected approval. Moreover, a May 19 memo from that same actuary supports the 10% increase. Second, the Pool Board never "withdrew its earlier rate filing" of 10%. Third, in correspondence dated March 29, the Pool expressly asked the Department "what rate parameters TDI will endorse" and TDI responded that it would accept a 20% rate increase. Only then did the Pool request the 20% increase.

Despite being the person with the authority and responsibility over Pool rates, the Commissioner tried to blame others for his decision. We dispute the Commissioner’s interpretation that the law requires him to set Pool rates at 200% of the standard rates. But the rates he set do not even comply with his interpretation of the law – as the Commissioner and his staff have acknowledged. It is disingenuous for the Commissioner to claim that statute required the 20% increase, when by his own admission the 20% increase does not comply with his interpretation of the law.

The Commissioner showed a bias in favor of insurance companies in the last two paragraphs of his letter. Although he recognized the hardship he is creating for sick Texans, he says that anyone concerned about that can go to the Legislature to get the law changed. Yet, if the Commissioner cared about this huge rate hike, he could have asked the Legislature – which was in session at the time – to amend the statute. His failure to do so speaks volumes about the lack of compassion for the sick Texans who look to the Pool as the only way to obtain health insurance.

Finally, the Commissioner claimed that a "20% increase was reasonable." Perhaps that sounds reasonable to an administration that cares more about insurance companies than people, but to those families already paying higher rates, it merely adds insult to injury. The Commissioner should stop passing the buck and show some real compassion – especially for sick people – by withdrawing his grant of a 20% rate increase.

Sincerely,

D.J. Powers

Attorney for the Center for Economic Justice