Despite failing to win rate rejection authority from voters in November, one insurance commissioner is trying to protect the market by other means, calling out carriers for what are deemed to be "unreasonable" rate increases.
A study by the office of California insurance commissioner Dave Jones has concluded that Aetna's 2015 premium increases for small group plans are "both excessive and unreasonable," at an average of 10.7 percent and as high as 19 percent for some.
"In the final days of 2014, one of the best gifts California small business owners could receive would be the promise of reasonable health insurance rates for the new year," said Jones. "Unfortunately, California law does not protect consumers and businesses from excessive and unreasonable health insurance rates. The ongoing trend of unreasonable rate increases imposed on California businesses and families over the last decade is likely to continue in 2015."
Jones was recently re-elected as commissioner, but voters rejected a ballot initiative he supported that would have given the commissioner power to veto premium increases determined to be unreasonable -- the charge he's now levelling for Aetna's small group policies, which isn't the first and probably won't be the last.
Actuaries in the California insurance department reviewed Aetna's small business health plan rate filings and concluded that the double digit increase was not justified, based on a number of factors and interpretations.
"The company's assumption that members in the new ACA-compliant plans are less healthy than members in the older plans contradicts Aetna's actual experience," the department argues. "Moreover, any such adjustment should be offset by the federal risk adjustment program, so this should not result in a rate increase."
Jones' office also contends that Aetna's expectation of growing by 2.5 percent is unjustified, "given the recent history of utilization growth in the company's health plans and current trends among carriers."
Jones also argues that Aetna is applying a pricing trend over a full quarter, with an annualized trend of 9.4 percent, when it "should have applied the pricing trend to only one and one-half months."
Absent the authority to force a rate reduction, Jones asked Aetna to bring down the increase, which he estimates at an extra $23 million across 64,000 individuals covered in the small group plans.
Aetna, though, is going ahead with the premiums as set in the filing, and challenging the notion that the increases are not justified.
"Milliman provided us with an independent actuarial analysis and certified our assumptions and rates are reasonable," the insurer said in a statement. "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."
In his four years in office, Jones has cited affordability and consumer protections as he scrutinized health insurers' rates, provider networks and accessibility standards, and he's vowed to keep up the watch.
In October, Jones won a small concession from Anthem Blue Cross, which reduced its premium increases from an average of almost 10 percent to 8 percent for some 120,000 Californians covered in small group plans -- although he had been requesting an increase of just 2 percent.