DMHC Slams Aetna for ‘Unreasonable’ Small Business Rate Increase

On Wednesday, California Department of Managed Health Care officials called Aetna's 19.2% rate hike for small businesses "unreasonable" and "unsupported," the Sacramento Business Journal reports.

Details of Rate Hikes

Aetna's rate hike went into effect April 1.

The increase affects about 16,000 small business employees who have coverage renewal dates during the second quarter of 2015, according to the Business Journal (Robertson, Sacramento Business Journal, 5/6).

According to the Los Angeles Times, Aetna rejected a request from state officials for a smaller rate increase that could have saved policyholders about $11 million.

Details of Criticism

DMHC's recent comments mark the third time since 2013 that the department has criticized Aetna for excessive rate hikes, after a 17.3% increase December 2014 and an 11.4% increase in 2013 (Terhune, Los Angeles Times, 5/6).

In a statement, DMHC Director Shelley Rouillard said, "Aetna has demonstrated a pattern of excessive and unsupported rate increases," adding that DMHC was "disappointed that Aetna has once again failed to reduce its rate increase to a reasonable level."

Separately, Elizabeth Imholz -- special projects director at Consumers Union -- in a statement called the increase "an incredible burden on consumers." She added, "Aetna's failure to provide documentation to back up its proposed increase suggests it is more opportunistic than it is necessary" (Sacramento Business Journal, 5/6).

Aetna's Response

Aetna defended its rate hike, citing:

Higher use of medical services as the economy improves;
Increases in specialty prescription drug costs; and
Provider contract changes (Los Angeles Times, 5/6).

Aetna spokesperson Anjie Coplin said, "While rate increases are never easy, our rates are based on actuarially sound data and a reasonable projection of future cost," adding that the insurer is "making every effort to maintain an affordable array of products" (Sacramento Business Journal, 5/6).

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