California Insurance Regulators Find Aetna's Rate Increase Excessive
Health insurer Aetna is being scrutinized by California insurance regulators, who reviewed the company's proposal to dramatically increase rates, and found it excessive.
May 03, 2012 /24-7PressRelease/ -- Aetna, a major provider of health insurance products serving employers, individuals and government units, is being scrutinized by California insurance regulators. The company recently informed California's Department of Insurance -- also called the CDI -- of the insurer's intent to dramatically increase insurance rates.
State insurance regulators reviewed the proposal and found it excessive. As a result, many state leaders called on the company to reconsider the hike in health insurance rates.
Commissioner's Statement and Aetna's Response
Insurance Commissioner Dave Jones stated in a recent press release that, after a formal investigation, the CDI felt that Aetna's recently proposed health-insurance rate increase for small employers was "unreasonable." Although the commissioner does not have the legal authority to prevent the proposed increase, he asked that Aetna voluntarily withdraw the proposal. Despite the request, Aetna implemented the increase that averages 30 percent over the next 24 months.
A new law required the insurance company to publicly release justification for the increase. Aetna claimed the price hike was necessary because the company receives a higher medical loss ratio than those of many of its California competitors.
CDI stated after an investigation that its actuaries disagree with Aetna's justification. They determined projected medical-cost increases used by Aetna to justify the excessive increase to health insurance costs "were not supported by Aetna's actual claims experience." The press release further states the company's California subsidiary made a 27.7 percent profit in 2011 and is increasing rates well in excess of the U.S. Bureau of Labor's estimated medical-cost inflation index.
New State Law
Even with this information, the commissioner was not able to stop the increase. This situation has created momentum for a new ballot initiative that would expand the commissioner's power to control unreasonable health-insurance rate hikes.
The insurance commissioner is currently able to reject and prevent proposed changes to automobile, homeowners and other types of insurance. Existing law requires health-insurance companies to only notify the CDI of any proposed plan changes. The new initiative would extend the requirement to also require approval by the insurance commissioner before health insurers and preferred provider networks can implement those proposed rate changes.
Surprising rate increases are one of many complicated health insurance issues that can arise. If you are a patient or health care provider struggling with a health insurance issue it is important to discuss your situation with an experienced health insurance attorney to learn how to protect your legal rights.
Article provided by Law Offices of Stephenson Acquisto & Colman
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