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CA Department of Insurance

Aetna Health Insurance Rate Increases for Small Employers are Unreasonable

News: 2012 Press Release

For Release: April 5, 2012
Media Calls Only: 916-492-3566
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Aetna Health Insurance Rate Increases for Small Employers are Unreasonable
This is the first formal finding of unreasonable by the CDI for health insurance rate increases under the new law, as Aetna and other health insurers lowered or dropped proposed rate increases in 2011 and 2012 at the request of the Commissioner.

Insurance Commissioner Dave Jones announced today that the Department of Insurance has determined Aetna's most recent quarterly health insurance rate increase for small employers to be unreasonable. 

Commissioner Jones requested that Aetna withdraw its April 1 health insurance rate increases for small employers after finding the proposed rates unreasonable. The Commissioner does not have the authority to reject excessive health insurance rate increases. Despite the request from the Department, Aetna has decided to implement the 1.8 percent average rate increases, which total an average 8 percent increase annually (with some receiving up to a 21.4 percent annual increase) and an average 30.3 percent increase over 24 months for small employers with Aetna's PPO health insurance policies. Aetna files rate increases quarterly on its small employer policies.

After a thorough review of Aetna's rate filing, the Department's actuaries found that Aetna made projections about medical cost increases that were not supported by Aetna's actual claims experience. The Department also determined that the Aetna subsidiary selling health insurance in California made a 27.7 percent profit in 2011, paid $1.7 billion in dividends to its parent company, is increasing rates in excess of the U.S. Bureau of Labor's medical cost inflation index, and with this most recent increase, Aetna is hitting its California small employer customers with an average increase of 30.3 percent over the last 24 months. 

More details on the Department's findings and Aetna's rate filing are available to the public.

"I am disappointed that Aetna has decided to reject my request to refrain from its latest health insurance rate increases on small employers, which are unreasonable and not justified by the company's claims experience. Small employers are struggling in this economy and should not be hit with a 30 percent increase in just 24 months for health insurance for their employees," said Insurance Commissioner Dave Jones. "Like the recent unsustainable rate increases imposed by other health insurers on Californians, Aetna's rate increase proves again that we need to close the loophole in California law which denies the Insurance Commissioner the authority to reject excessive health insurance rate hikes."

Commissioner Jones authored three bills to give the Insurance Commissioner the authority to reject excessive health insurance rate hikes when he served in the State Assembly and as Insurance Commissioner has continued to fight to obtain this authority to protect California consumers and businesses by sponsoring legislation, Assembly Bill 52, which is in the State Senate.

The California Department of Insurance, established in 1868, is the largest consumer protection agency in California. Insurers collect $310 billion in premiums annually in California. Since 2011 the California Department of Insurance received more than 1,000,000 calls from consumers and helped recover over $469 million in claims and premiums. Please visit the Department of Insurance website at Non-media inquiries should be directed to the Consumer Hotline at 800.927.4357. Telecommunications Devices for the Deaf (TDD), please dial 800.482.4833.

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