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CA Department of Insurance

Major health insurer imposes unreasonable rate on California businesses

News: 2015 Press Release

For Release: October 15, 2015
Media Calls Only: 916-492-3566
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Major health insurer imposes unreasonable rate on California businesses
Aetna begins fall with hefty health insurance rate increase on California’s small businesses

SACRAMENTO, Calif. - Insurance Commissioner Dave Jones announced today that Department of Insurance actuaries found Aetna Life Insurance Company's most recent small group health insurance rate increase excessive and unreasonable. Aetna is increasing rates for small businesses and their employees by an annual average of 27.4 percent. This increase will impact small businesses that renew their policies in the fourth quarter of 2015 -affecting over 40,000 employees.

"Small businesses are the lifeblood of California's economy," said Commissioner Jones. "Small businesses simply cannot afford unwarranted and unreasonable increases in health insurance costs nor can their employees."

Department of Insurance actuaries reviewed Aetna's rate filing and found that the average 27.4 percent increase was not based on Aetna's most recent claims experience but was based on an unreasonable and excessive pricing trend and other unreasonable assumptions. Commissioner Jones advised Aetna of the department's finding that the rate increase was unjustified. Aetna decided to impose the rate increase despite the finding that the rate increase is excessive and unreasonable, costing small businesses a projected $5.5 million in excessive rates.

Unlike 35 other states, California does not have the legal authority to reject excessive health insurance rate increases. A recent national study found that those states with the authority to regulate health insurance rates had lower rate increases as compared to states like California which do not have the authority to regulate health insurance rates.

Media Notes:

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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