Insurance Rates Will Increase for Entertainment Groups

Health insurer Cigna is increasing 2007 premiums by an average of 82% for California members of health plans purchased through professional associations representing entertainers, the Los Angeles Times reports. The size of the increase is due in part to Cigna classifying the health plans as a single, large group plan rather than individual groups with fewer members.

The rate increase will affect about 600 people who do not have employer-sponsored health insurance benefits or who do not earn enough as entertainers to qualify for union-sponsored benefits. More than 25 professional associations offer members health insurance benefits through the New York-based Entertainment Industry Group Insurance Trust.

Cigna has provided insurance benefits to the trust for 25 years.

Cigna spokesperson Gwyn Dilday said the rate increase was determined by estimated health care claims for the group. She said that the company had informed the Department of Managed Health Care of the planned rate increase and that DMHC had not told the company that it had "improperly rated" the entertainers' group.

However, some consumer advocates said that the groups' insurance coverage should be priced individually, rather than as a single, large group.

According to the Times, community rating rules bar insurers from charging small groups premiums more than 10% higher than similar groups. Similar laws do not govern rates for large groups.

DMHC Director Cindy Ehnes said that the agency is working to determine whether it has oversight on the matter, adding, "The biggest question is whether small group laws apply to this."

In addition, some consumer advocates have said the situation could signal large rate increases for California employers after recent mergers and acquisitions reduced the number of insurers doing business in the state.

Insurers dispute the claim and say that the market remains competitive (Girion, Los Angeles Times, 11/23).