Aetna Proceeds With Rate Hike Despite Pressure From State

Aetna will proceed with an insurance premium rate hike that took effect April 1, despite criticism from California's insurance commissioner and several state consumer groups that the increase is excessive, the Sacramento Bee reports (Buck, Sacramento Bee, 4/6).

Background

According to Insurance Commissioner David Jones (D), Aetna plans to raise rates by an average of 8% annually for about 77,000 employees of small businesses. Jones said the rate hike would be as high as 21% in some cases (Lifsher, Los Angeles Times, 4/6).

This week, Jones deemed the increase "unreasonable." According to his analysis, Aetna made "projections about medical cost increases that were not supported by Aetna's actual claims experience" (Sacramento Bee, 4/6).

According to the Los Angeles Times, Jones' finding marks his first formal classification of a rate hike as unreasonable since a new state law took effect in January that requires health insurers to publicly release justification for planned rate increases. The law does not give the state authority to reject rate increases it deems unreasonable (Los Angeles Times, 4/6).

State Reaction

Jones said Aetna's decision to proceed with the rate hike is the first time a California insurer has continued to implement a rate hike that was deemed excessive by the insurance department. He said, "It's disappointing and frustrating, especially since other health insurers have agreed to refrain from increases" (Sacramento Bee, 4/6).

Last month, Anthem Blue Cross agreed to lower planned rate hikes for almost 600,000 policyholders in response to pressure from state officials (California Healthline, 3/22).

Anthem's Response

Aetna officials in a statement said, "Aetna takes our commitment to our small business customers seriously, and we are making every effort to maintain an affordable array of products that provide access to quality health care services" (Los Angeles Times, 4/6).

Anjie Coplin -- an Aetna spokesperson -- said, "While rate increases are never easy, our rates are based on actuarially sound data and reasonable projection of future cost."

Coplin noted that about 16,000 small business workers and their dependents will see the increases in their renewals in April, May and June (Sacramento Bee, 4/6).

State Officials Want Authority To Reject Rate Hikes

Jones is pushing for a ballot initiative -- supported by Consumer Watchdog -- that would give state regulators the authority to reject health insurance rate hikes they considers excessive (Wilde Mathews, Wall Street Journal, 4/5).

Supporters of the initiative said they have gathered about 300,000 of the 800,000 signatures required to qualify the measure for the November ballot (Los Angeles Times, 4/6).

Meanwhile, Assembly member Mike Feuer (D-Los Angeles) is supporting legislation (AB 52) that would allow state regulators to reject certain rate hikes (Feuer release, 4/5).