Capitol Alert

Aetna charging small businesses too much, California commissioner says

Dave Jones, left, chats with Roger Dickinson at the former assemblyman’s campaign headquarters on election night earlier this year.
Dave Jones, left, chats with Roger Dickinson at the former assemblyman’s campaign headquarters on election night earlier this year. Special to The Bee

With the bruising battle over Proposition 45 behind him, California Insurance Commissioner Dave Jones said Thursday that another health insurer is preparing to charge small businesses “excessive and unreasonable” rates.

Jones’ actuaries determined Aetna Life Insurance Company’s filing for small-group policies – with an average 10.7 percent increase – will affect more than 64,000 people beginning Jan. 1. Some will see an increase of 19.5 percent while a few will experience a 5.3 percent decrease, an Aetna spokeswoman said. The company stressed that the increases are based on strong data and reasonable projections.

But Jones said the average increase was 3.6 percent when the insurer first submitted its rate proposal over the summer. That ballooned to 10.7 percent in October. The next month, California voters overwhelmingly rejected Proposition 45, the ballot measure supported by Jones that would have required the state’s elected insurance commissioner to approve individual and small-group health insurance rates. Jones suggested that Aetna’s larger increase plan in October was inspired by public poll results that indicated the rate-regulation measure was foundering and likely to go down in November.

The commissioner noted his department has repeatedly found that insurers, including Aetna, were charging too much. The latest increase will cost small businesses $23.5 million in excessive premiums, Jones said.

“Health insurers are still able to charge excessive rates and no one in California has the authority to stop them,” he said.

Cynthia Michener, the Aetna spokeswoman, said that though rate increases are never easy, the rates are based on actuarially sound data and a reasonable projection of future cost. She said the firm Milliman provided Aetna with an independent actuarial analysis and certified the insurer’s assumptions and rates as reasonable.

“Increases in medical costs and utilization for our members enrolled in our small-group plans continue to exceed the rate at which we have been able to increase premiums,” she said. “Aetna takes our commitment to our small-business customers seriously, and we are making every effort to maintain an affordable array of products that provide access to quality health care services.”

Jones said the department made the determination based on three factors, including the company’s bad assumption that customers enrolled in new plans complying with the federal health care overhaul are less healthy than those in older policies. Jones also called projections that plan use will grow by 2.5 percent in 2014 and 2015 “unjustified,” and said the insurer applied a pricing trend the department concluded was “excessive.”

Call Christopher Cadelago, Bee Capitol Bureau, (916) 326-5538. Follow him on Twitter @ccadelago