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Santa Monica, CA -- More than 1,500,000 Californians will face health insurance premium increases on July 1 averaging 3% to 17.4%, according to state filings. Some patients with Aetna small business plans will see premium increases as high as 92.5%. California insurance regulators need the power to protect consumers and deny such steep rate increases when they are found to be excessive or unjustified, said Consumer Watchdog.

AB 52 (Feuer) would require a health insurance company to get approval from the elected insurance commissioner before a health insurance rate hike takes effect -- subjecting health insurance rates to the same strict rate regulation that auto, homeowners and other insurance companies already comply with in California. The bill will be heard in the California State Senate Health Committee Wednesday afternoon. The majority of states have the power to reject unreasonable premium hikes, but not California.

“This is an urgent life and death issue for those Californians who face premium hikes Friday as high as 92% because California is one of the few states without premium regulation,” said Consumer Watchdog president Jamie Court. “Californians will continue to be held hostage by profiteering health insurance companies if the legislature does not grant the elected insurance commissioner the power to stop arbitrary and unnecessary premium hikes.”

In recent years, health insurance policyholders in California have seen repeated massive rate hikes like those set to take effect Friday, even as medical inflation has been fairly low.  Consumer Watchdog noted that these skyrocketing rates have coincided with ever-increasing profits for insurance companies.  According to Aetna's rate filing, the insurer's 2011 companywide rate of return is projected to be 24.8%.

A Consumer Watchdog report finds that rate regulation is necessary to hold down excessive rate increases. In Massachusetts for example, where health reform including an exchange and individual mandate was the model for national reform, insurance premiums continued to increase until prior approval rate regulation was enacted to moderate increases.

Download the report: “Health Reform and Rate Regulation: Can’t Have One Without the Other,” here: http://www.consumerwatchdog.org/blog/our-plan-reducing-health-insurance-rates

AB 52 would require insurance companies to get permission before implementing any hike and would allow state regulators to deny or modify rate changes determined to be excessive. Health insurers that are increasing rates on patients July 1 have lobbied heavily against the bill, which authorizes insurance regulators to review insurance company profits and overhead as well as company projections about future health care costs in order to determine whether or not to allow a rate increase to take effect.  It also allows members of the public to challenge proposed rate hikes.  

AB 52 would enact rules for health insurance that are similar to Proposition 103, which requires the Insurance Commissioner to regulate auto and other property/casualty insurance rates. Under those rules California motorists have saved more than $62 billion on their auto coverage over the past two decades, according to a 2008 report by the Consumer Federation of America.   

 

CA Health Insurance Rate Hikes Take Effect July 1, 2011

 

 

Company

Average Increase

Maximum Increase

Members Affected

Period

 

Aetna

 

 

 

 

DMHC 127127451

Small Group

12.7%

92.5%

69,123

annual

CDI 00542

Individual

15.6%

18.1%

79,000

annual

CDI 00827

Small Group

17.4%

67.8%

93,246

annual

 

Anthem Blue Cross of California

 

 

DMHC 127151007

Group

9.5%

 

4,089

 

CDI 00002

Individual

9.1%*

 

638,631

annual

CDI 00660

Small Group

3.0%**

7.0%

17,505

quarterly

CDI 00736

Small Group

8.8%

 

10,719

annual

 

California Physicians' Service/ Blue Shield of California

DMHC 127142187

Small Group

9.0%

29.0%

261,072

12 or 15 mo

CDI 00808

Small Group

8.0%

33.0%

21,007

12 or 15 mo

 

Health Net of California

 

 

 

DMHC 127139743

Small Group

12.6%

23.0%

26,814

annual

CDI 00825

Small Group

16.0%

 

867

annual

 

Kaiser

 

 

 

 

CDI 00829

Small Group

12.0%

 

1081

annual

DMHC 127146900

Small Group

10.7%

 

304,274

annual

CDI 00828

Small Group

12.0%

 

812

annual

 

Sharp Health Plan

 

 

 

DMHC 127192477

Small Group

14.1%

18.6%

5,326

quarterly

DMHC 127207841

Small Group

11.5%

11.7%

1,827

semi-annual

 

 

 

 

 

 

 

Total Members Affected

 

1,535,393

 

Source: Ca. Dept. of Insurance and Dept. of Managed Health Care

*CDI negotiated reduction from avg. 16.4% and delayed implementation from April 1

**CDI negotiated reduction from avg. 6% increase

 

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Consumer Watchdog is a nonpartisan consumer advocacy organization with offices in Washington, D.C. and Santa Monica, CA. Find us on the web at: http://www.ConsumerWatchdog.org