Aetna Price Gouging Consumers With Yet Another Unjustified Premium Spike, Say State Regulators; While Top Executives Raked In More Than $170 Million In Three Years
Santa Monica, CA – Aetna is price-gouging consumers with an unjustified premium hike, its fourth in the past two years, according to regulators at California’s Department of Managed Health Care (DMHC). The average 21 percent rate hike is yet one more example of why state regulators should have the power to reject unreasonable health insurance price spikes, said Consumer Watchdog today.
Unlike 35 other states, California health insurance regulators do not have the power to stop unreasonable rate increases.
“Yet again, a health insurance company takes California small business owners to the cleaners and no one has the power to stop them. How many more times will we be fleeced before California enacts rate regulation and we can finally protect ourselves from excessive, unjustified price spikes?” said Carmen Balber, executive director of Consumer Watchdog.
Aetna imposed an average 21 percent premium increase for more than 82,000 people covered by small businesses. The increase, which took effect July 1, is unreasonable according to an actuarial analysis by DMHC. Aetna rejected DMHC’s request to lower rates, which would have saved consumers $4 million. In the past eight months, Aetna has subjected more than 40 percent of its small group members to unreasonable rate increases, according to regulators, affecting more than 300,000 people.
This egregious pattern, according to Shelley Rouillard, director of the California Department of Managed Health Care, “equates to price gouging in today's market.”
Aetna’s filing with the DMHC reported executive compensation from 2011 to 2013. The health insurance company’s top 10 executives were paid more than $170 million, with CEO Mark Bertolini raking in more than $54 million. Aetna, the nation’s third largest insurance company, recently announced a $37 billion merger with Humana.
Since 2012, health insurance companies have imposed more than $350 million in rate hikes deemed by DMHC and the Department of Insurance to be unjustified.
Last year, insurance companies spent $56 million to defeat Proposition 45, which would have required health insurance companies to open their books and justify rates, allow state regulators to reject excessive increases. Auto, home and business insurance rates are already regulated in California.
That voter-approved law has saved drivers over $100 billion since it was enacted in 1988, according to the Consumer Federation of America. The law allows consumer organizations to challenge excessive rates on behalf of the public.
Last year, Consumer Watchdog saved home and auto insurance policyholders $127 million in premium hikes that would have taken effect if not for its rate challenges, which are barred for health insurance companies.
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