Insurance Commissioner Slams Aetna’s Small-Business Rate Hike

California Insurance Commissioner Dave Jones slammed Aetna Thursday for an “unreasonable” quarterly rate hike on small-business owners that brings the annual average increase to more than 27 percent.

The hike affects small employers that renew their health insurance policies in the fourth quarter — and an estimated 40,000 employees.

Dept. of Insurance actuaries reviewed Aetna’s rate filing and found the average 27.4 percent increase was not based on Aetna’s most recent claims experience. The department concluded the underlying medical cost trend should have been 7.7 percent, not the 8.6 percent cited by the health plan.

The average fourth-quarter rate increase imposed by Aetna is 3.4 percent. Department officials asked Aetna to reduce it to 0.8 percent — and the annual increase to 24.8 percent — a move that would have saved members as much as $5.5 million, according to Jones.

“Small businesses simply cannot afford unwarranted and unreasonable increases in health insurance costs, nor can their employees,” Jones said in a news release.

Aetna stands by its own math.

The unit cost of inpatient hospital admissions increased 6.7 percent in the last 12 months, spokeswoman Anjie Coplin said in an email. Unit costs for home health, mental health and prescription drugs rose 5.3 percent.

“While rate increases are never easy, our rates are based on actuarily sound data and a reasonable projection of future cost,” she said.

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