Since 2005, Christopher F. Koller has served as the Rhode Island health insurance commissioner. His office, with four full-time equivalent employees and a budget of almost $700,000, recently came under fire and was nearly cut from this fiscal year’s state budget.
Providence Business News talked with Koller about the responsibilities of his office.
PBN: What does your office do?
KOLLER: Insurance – private, commercial insurance – is regulated by the states and usually there are two standards for health insurance that the state is called to enforce.
One is called consumer protection, which is to make sure that the health insurer contracts with suppliers conform with state law and that the insurers follow those contracts. So people come to the state with their contracts, and we help them get the rights that are in their contracts.
The second standard that health insurers – or insurers in general – are held accountable to that the state enforces is financial solvency. [Our job] is to make sure the insurers have adequate financial reserves, so they can honor the commitments in their contracts. An under-reserved insurer means they can’t pay all the claims that are due and that creates all sorts of problems.
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PBN: When was the office created?
KOLLER: In 2004, the legislature broke out health insurance regulation from other insurance regulation. In Rhode Island, the Department of Business Regulation is responsible for insurance regulation … and in 2004, the legislature created a different set of standards for health insurance from other types of insurance and a cabinet-level position for overseeing them.
In addition to consumer protection and commercial insolvency, the additional [regulatory duties] they created were fair treatment of providers; to see the system as a whole, taking a system-wide view of medical care; and to direct health plans toward policies that promote improved system access, affordability and health care quality. So the effect of that is to hold health care insurers to a different and higher level of operation and behavior than other insurers.
PBN: You worked in the private sector for years – how has that affected your approach to this regulatory position?
KOLLER: I think you’d have to ask some of the entities that we regulate, but to me my experience with the industry I think helps my ability to develop and enforce the standards consistent with the statute. I know what it’s like to pay claims. I know what it’s like to develop rates. I know what it’s like to read a health insurer’s financial statements. It makes it easier for me to appreciate how the different parts of the system interact with one another.
PBN: Recently there has been a lot of talk about requested rate hikes. What’s happening there?
KOLLER: Clearly the big thing that consumers are facing is increasing health care costs. It affects everybody and makes it harder for employers to keep health insurance. It makes it harder for individuals to pay for their share of the cost of that insurance. And when people drop insurance, it makes more and more uninsured people who still seek out care within the system.
KOLLER: It has to be balancing, because fundamentally health insurers need a certain amount of rate increases to be financially solvent. Insolvent insurers are a problem for all of us and in the mid-1990s we had two insolvent insurers in Rhode Island that shut down or moved out of state.
PBN: So your role is to maintain both?
KOLLER: You want to try to keep rate increases low and you want to try to keep insurers solvent, but 85 percent of your health insurance premium pays for medical cost. Part of the idea that the legislature had in creating this position was to work with insurers to address the underlying cost drivers. Only 15 or 20 percent of an insurer’s costs are directly in its control, relating to administration.
If a hospital feels that it’s losing money because of increasing uninsured care or inadequate reimbursement rates, they may look explicitly to the commercial insurer to not only pay the costs of care for their members, but also something additional.
PBN: How directly does your office deal with those added provider costs?
KOLLER: We do not interfere with private contracts between the insurers and the providers, but when the effects of that are showing up in the rate increase it becomes a topic of concern. If you look at information that we’ve put out with the recent health plan filings, it attempts to measure what is driving the rate requests that the health insurers are seeking. Some of it is for their own administration and profit, but the rest is for increased health care costs. Our statutory policy in Rhode Island is that those are private negotiations between the health plans and the providers, but the affects of those are paid for by the employers who purchase insurance. •
INTERVIEW
Christopher F. Koller
Position: Rhode Island Health Insurance Commissioner
Background: Koller held a series of management positions at Health Care Plan in New York before becoming CEO of Neighborhood Health Plan of Rhode Island in 1996. He served as CEO until 2005, when he took his current position.
Education: A.B. in math and economics from Dartmouth College, 1983; M.A. in religion from Yale University, 1989; M.A. in management from Yale University, 1989
First Job: As a child in Rochester, N.Y., Koller worked during the summer as a dishwasher in the kitchen at a country club.
Residence: Rumford
Age: 48
