United Healthcare Insurance Company rate increase on small businesses excessive and unreasonable
News: 2013 Press Release
SACRAMENTO - Insurance Commissioner Dave Jones announced today that the California Department of Insurance has determined the 4.9 percent quarterly average rate increase imposed by United Healthcare Insurance Company on small business policyholders is excessive and unreasonable. The increase, effective May 1, 2013, impacts approximately 12,000 employees and their dependents this quarter and will ultimately impact more than 45,000 when their policies renew later in the year.
The total cost of the rate increase to California small businesses insured by United Healthcare is $12.5 million over time.
Department actuaries reviewing United's rate filing determined that when factoring in benefit reductions, which were effective January of this year, the actual 12-month average increase on these small businesses is 7.7 percent.
"Once again California health insurance consumers are faced with another rate increase," said Commissioner Jones. "After a comprehensive review of United Healthcare's rate increase, my department's actuaries concluded it is unreasonable, but the law does not require health insurers to comply with the Insurance Commissioner's determination, so they are proceeding with the increase despite it being excessive and unreasonable."
Unlike most other lines of insurance, the commissioner does not have the authority to reject excessive health insurance premium increases.
"At a time when small businesses are struggling to survive, United Healthcare's rate increase is just one more unwarranted economic burden on California's small business owners and their employees," said Jones. "These substantial and ongoing health insurance rate increases --on the backs of individuals, families and small business -- are simply unsustainable, but rates will continue to rise absent the legal authority to reject them." Department actuaries found United was unable to provide substantive evidence to support its rate increase. Key findings include:
- Contrary to United's claims experience, United Healthcare over estimated their trends for cost and number of claims;
- United's percentage of premium attributable to covering administrative expenses is significantly higher than the market average in California;
- United's Healthcare's company-wide return on equity (ROE) for 2011 was 55 percent, and 53.7 percent for 2012. The margin on revenue for the company's California business exceeds other carriers as well.
The California Department of Insurance, established in 1868, is the largest consumer protection agency in California. Insurers collect $259 billion in premiums annually in California. In 2014 the California Department of Insurance received more than 175,000 calls from consumers and helped recover over $54 million in claims and premiums. Please visit the Department of Insurance web site at www.insurance.ca.gov. Non-media inquiries should be directed to the Consumer Hotline at 800.927.HELP or 213.897.8921. Telecommunications Devices for the Deaf (TDD), please dial 800.482.4833.