Aetna Last of Four Insurers Approved in California for Double-Digit Premium Rate Hikes
The California Department of Insurance has given the green light for Aetna to raise premiums rates an average of 19% on individual health insurance plans, impacting about 65,000 people in the Golden State.
Aetna was the last of the four major health insurers in California whose double-digit rates increases were approved by the insurance regulator.
Over the past several weeks, the department also approved premium rate hikes for Health Net, which was cleared for an average rate increase of 16% on its individual health plans; as well as Blue Shield of California and Anthem Blue Cross. All of the rate increases take effect Oct. 1.
In June, the insurance department said it would now require requests for premium rate increases by top health insurers in the individual market to undergo an additional review by outside actuaries. Those insurers -- Anthem Blue Cross, a unit of WellPoint Inc. (NYSE: WLP), Aetna, Health Net and Blue Shield of California -- cover about 90% of the market (BestWire, June 16, 2010).
Earlier this year, Anthem Blue Cross withdrew its request to raise premiums by up to 39% on members in its individual health plans after the department found "substantial errors" in its rate filing (BestWire, April 30, 2010). When Anthem filed, Insurance Commissioner Steve Poizner sent the rate filing to an outside actuary for review.
Ioannis Kazanis, a spokesman for the California insurance department, said in an e-mail that the department does not have prior approval when it comes to health insurance rates. To ensure consumers "are treated fairly and charged accurate prices," Poizner took the added step of having an outside, independent actuary review these rate filings.
Aetna said it's pleased that the insurance department accepted the rates. "Rate increases are never easy, but the growing market trends we are seeing in California, such as the increasing prices for hospital care, prescription drugs, doctor's visits, and other health care services, directly impact what our members pay," the company said in a statement.
Recently, California lawmakers rejected a bill to impose mandatory rate review on health plans, instead approving legislation to enforce an "actuarially sound" standard for rate filings. The Senate voted down A.B. 2578 on the last day of the legislative session. It would have forced health maintenance organizations and health insurers to follow the same rules that apply to automobile and homeowners insurance policies under 1988's Proposition 103 (BestWire, Aug. 17, 2010).
In August, the department cleared the way for the Anthem Blues to move ahead with the scaled-back rate increase after the previous increase was canceled. The new rates average from 14% to 20% and impact nearly 600,000 of its 800,000 policyholders in its individual health plans in California.
Regulators also allowed Blue Shield of California to enact rate increases, which averaged 19% to 29%, for 250,000 individual policyholders (BestWire, Aug. 26, 2010).
Since the passage of U.S. health care reform, battles have erupted in some states between insurance commissioners and health insurers over double-digit premium rate increases sought by insurers on members in their individual and small group health plans. The issue, in large part, has become a political hot potato, some say (BestWire, July 19, 2010).
Under the reform law, insurers will be required to justify certain increase proposals considered "unreasonable" by state regulators and the U.S. Department of Health and Human Services, though that's still being defined.
(By Fran Matso Lysiak, senior associate editor, BestWeek: [email protected])
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