Aetna raises health insurance rates for small employers

By Marc Lifsher

April 5, 2012 12 AM PT

Aetna Life Insurance Co. raised health insurance rates for small employers by an average of 8% a year beginning April 1, a hike that California Insurance Commissioner Dave Jones called unreasonable.

Jones said Thursday that he’d asked Aetna to withdraw its increase in quarterly rates, affecting 77,000 employees and dependents of small employers.

But Jones said he has no legal power to reject Aetna’s rate increase, a situation that he said could change if voters back a proposed initiative to require health insurers to seek prior approval from regulators for changes in rates.

“Small employers are struggling in this economy and should not be hit with a 30% increase in just 24 months for health insurance for their employees,” said Jones. “Like the recent unsustainable rate increases imposed by other health insurers on Californians, Aetna’s rate increase proves again that we need to close the loophole in California law which denies the insurance commissioner the authority to reject excessive health insurance rates.”

Aetna did not respond to a request for comment on the commissioner’s statement.

Backers of the proposed initiative, dubbed “Justify Rates,” said they’ve gathered about 300,000 of the 800,000 signatures from registered voters they they need to qualify for the November ballot.

The initiative, said author Jamie Court,”is a poster child for what we need to give the commissioner: the power to say no.”

The initiative is opposed by health insurers, doctors and hospitals, who contend that its passage would boost healthcare costs unnecessarily.

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