DOI: 27.4% Rate Hike for Aetna Small Businesses ‘Unreasonable’

Last week, California Insurance Commissioner Dave Jones (D) called Aetna's average rate hike of 27.4% on small business health plans "unreasonable," the Sacramento Business Journal reports.

Details of Rate Hike

The rate hike will affect small businesses -- including about 40,000 workers -- that renew their health plans in the fourth quarter of the fiscal year.

Aetna spokesperson Anjie Coplin in an email said the increase is necessary because the unit cost of inpatient hospital admissions went up by 6.7% over the past 12 months. In addition, she said unit costs for home health, mental health and prescription drugs increased by 5.3%.

Coplin said, "While rate increases are never easy, our rates are based on [actuarially] sound data and a reasonable projection of future cost."

Jones' Comments

However, Jones in a release said, "Small businesses simply cannot afford unwarranted and unreasonable increases in health insurance costs, nor can their employees" (Robertson, Sacramento Business Journal, 10/16).

According to the release, state Department of Insurance actuaries found that the rate hike was not based on the insurer's most recent claims experiences. DOI argued that the rate increase "was based on an unreasonable and excessive pricing trend and other unreasonable assumptions."

Jones said he advised Aetna that the rate hike was not justified, but the insurer decided to impose the increase (DOI release, 10/15).