Aetna's rate hike excessive for small employers, regulator says

California: Aetna's 19% rate hike for small businesses is excessive

For the third time since 2013, California's managed-care regulator has criticized health insurance giant Aetna Inc. for imposing an excessive rate hike on small employers.

The nation's third-largest health insurer is raising rates by 19.2%, on average, for about 16,000 people covered by small employers. This change in premiums took effect last month.

Shelley Rouillard, director of the California Department of Managed Health Care, said Aetna has demonstrated a pattern of unjustified rate hikes.

“We never got a real good explanation for why that’s an acceptable rate increase," she said. “Aetna has told me they’re interested in expanding their small-group product, but with rate increases like this I think that’s a losing proposition."

State officials asked Aetna for a smaller increase that would have saved these employers at least $11 million, but the company rejected that idea.

Aetna said its rate increase was warranted based on the expected medical costs for employers.

In state filings, the Hartford, Conn., company cited changes in provider contracts, significant increases in specialty drug costs and an overall uptick in medical use due to the economic recovery.

"While rate increases are never easy, our rates are based on actuarially sound data and a reasonable projection of future cost," a company spokeswoman said. "We are making every effort to maintain an affordable array of products."

Overall, the managed-care agency has found five rate increases unreasonable since 2011, and three of them were from Aetna.

In December, the regulator found Aetna's 17.3% increase for small businesses unreasonable. It reached a similar conclusion in 2013 for an 11.4% increase.

But California officials have no power to stop health insurance rate increases.

Voters last fall soundly rejected Proposition 45, which would have enabled regulators to block rate hikes that were deemed unreasonable in the individual and small employer markets.

Twitter: @chadterhune

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