California Regulators Will Hire Outside Analysts to Review Rate Increases

Published: Thu 17 Jun 2010

Perry Begay

California Regulators Will Hire Outside Analysts to Review Rate Increases

California state health officials plan to recruit outside analysts to go over proposed rate increases from the state's largest four health insurers, the California Department of Insurance reported on Wednesday.

The reviews will examine the rate filings submitted recently by Aetna and Blue Shield of California, in addition to future filings by Health Net and Anthem Blue Cross. Together, the four medical insurers cover 90 percent of self-insured California consumers, or those who purchase coverage on their own instead of through a group.

The department of insurance made the decision to act after an objective audit of Anthem indicated that the health insurer, which proposed raising rates by up to 39 percent, had made several accounting mistakes in figuring those new health insurance rates. Since then, Anthem has canceled the rate increases, which would have impacted up to 800,000 policyholders, and has not yet submitted a new rate filing.

Health regulators believe that the additional scrutiny such audits would cause would help curtail premium increases, but the department of insurance in reality has little power over health insurance rates aside from ensuring that companies are devoting at least 70 cents of every premium dollar to medical care.

Still, California regulators insist that their actions have worked. "We want to use every inch of our regulatory ability to make sure consumers pay accurate rates," explained Darrel Ng, spokesperson for the department. "We try to treat insurers as similarly as possible. After Anthem had their rates analyzed in this manner, we expanded it to the other major players in the market."

Ng also emphasized the fact that although Anthem may submit new filings for rate increases, it has not thus far, and every month that passes means policyholders are not paying higher premiums. He explained that unlike the issue with Anthem, the insurance department had no prior warnings that the other health insurers submitted erroneous filings.

Aetna submitted a proposed rate increase in March for its 65,000 policyholders in California that averaged 18.7 percent, reported Cynthia Michener, spokesperson for the insurance company. She said the health insurer has reviewed its figures multiple times.

Blue Shield executives reported that they plan to seek rate increases averaging roughly 18 percent for their 240,000 self-insured consumers. Health Net has not yet proposed new premiums.