Premium increase affecting 68,000 small business employees will be reduced
CALPIRG Education Fund
January 9 — This week, Aetna Life Insurance Company announced plans to reduce its proposed increase in health insurance premiums. In November, CALPIRG Education Fund completed a review of the rate hike and recommended that the California Department of Insurance declare it unreasonable. Now, 68,000 small business employees impacted by the rate hike will see a significantly smaller increase in their health insurance premiums.
“We kicked the tires and found that the increase Aetna wanted was excessive and based on faulty assumptions,” said Wesley Samms, health care advocate for CALPIRG, adding, “This is a big win for consumers and for small businesses across California.”
Aetna’s initial filing would have raised rates an average of 8 percent for 8,000 small businesses, and by as much as 22.3 percent for some. CALPIRG Education Fund warned the Department of Insurance that Aetna’s filing used an inflated medical trend and attempted to charge policyholders in 2013 for new fees which would not happen until 2014.
On Monday, the Department of Insurance issued a statement in agreement with CALPIRG Education Fund’s own assessment, stating that anticipated fees for 2014 could not be cited as a reason to increase premiums in 2013. Their statement explicitly noted that, “Including 2014 fees in 2013 would render those rates ‘unreasonable’ under departmental guidance 1163:2.” Aetna is not the only insurer to try to impose 2014 fees early, and the Department issued the statement as a warning to all insurance companies filing increases in 2013.
“Aetna was trying to jump the gun on new fees and essentially charge consumers this year for fees that aren’t occurring until next year,” Samms explained. “We are glad that Insurance Commissioner Jones and his department recognize that such tricks by health insurers are not fair play.”
As part of our ongoing review of insurance rate increases, CALPIRG Education Fund recently completed another rate review of Anthem Blue Cross’s proposed mass increase on individual policy holders, which will go into effect on February 1, 2013. Anthem proposes to raise rates on 340,000 Californians by 20 percent on average. Again, we’ve found that the rate increase is not adequately justified as it appears to be based on unsupported low loss ratios and overstated medical trends. If Anthem’s rate increase moves ahead, it will mark the second time in a year that Anthem raised rates on Californians. For those residents holding these insurance policies, the cumulative impact of these increases in such a short period may be excessive. CALPIRG Education Fund declared Anthem’s proposed rate hike unreasonable and recommended that the Department of Insurance do the same.
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The California Public Interest Research Group (CALPIRG) Education Fund conducts research and public education on behalf of consumers and the public interest. Our research, analysis, reports and outreach serve as counterweights to the influence of powerful special interests that threaten our health, safety or well-being.