Aetna rate increase bites the dust; Review finds major ‘mathematical errors’

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It was insurance company lobbying that stuck Americans with a health
reform law that lets private insurance companies run the show. The
industry keeps proving that it has no intention of doing an honest job
of it.

The California Department of Insurance announced Thursday that
Aetna’s rate increases in the individual market, like those of Anthem
Blue Cross, were full of "substantial mathematical errors." The company
(also like Blue Cross) "agreed" to withdraw the planned premium hikes.

bad the state insurance department hasn’t been doing the same kind of
examination for the past decade. Too bad state insurance departments in
most states never or rarely take a close look at health premium
increases, especially in the predatory market for individual insurance.
Blue Cross, for instance, not only had math errors, but was caught by
Congressional investigators deliberately padding its rate
increases. How much of this has gone on for years? How much is a blatant attempt to maximize profit ahead of federal

Too bad the insurance industry is lobbying
furiously at the federal level to weaken or cripple health reform
regulations that could make them release a lot more information about
rake hikes, and require insurers to spend more premium dollars on
actual health care, instead of grossly inflated overhead and executive

The good news? There is some. The California insurance
premium fiasco–two companies down and two smaller ones, Blue Shield
and Health Net, still to be examined by outside auditors–is a wake-up
call for state and federal legislators and regulators.

  • In California, a key state Senate committee Wednesday approved a bill (AB2578)
    that would require insurance regulators to approve all health insurance
    premium increase before they go into effect. (Auto and home insurance
    in the state already undergo such approval under a voter-approved
    measure, Prop 103, that has saved residents tens of billions of dollars.)
    The math scandal should push the full state Senate to give final
    approval to the health insurance regulation, long favored by Consumer
    Watchdog. It’s hard to imagine what excuse Gov. Arnold Schwarzenegger
    could give to veto it, though he’s never seen a regulation that he
  • Insurance Commissioner Steve Poizner announced that he would henceforth post on the state’s
    website every health insurance rate increase proposal–just like auto
    and home increases are already posted under Prop. 103. Unfortunately,
    unlike with Prop 103, insurers won’t have to pay for outside
    examinations of and challenges to the rate hikes.
  • Federal
    regulators will have more ammunition to turn aside insurance company
    lobbying, and even outright legal threats, against tough
    interpretations of the new health reform law. Insurers, for instance,
    are trying to limit how much information about rate hikes they will
    have to make public. They are trying to redefine administrative and cost-cutting departments as "health quality improvements" so they can be counted as extra "health care."

needs to be as enraged as the Americans who are losing their health
insurance because of spiking costs and loss of employer insurance. Now
is the time for both California and the White House to say no to the
lobbyists and force some honesty on the health insurance industry.

Consumer Watchdog
Consumer Watchdog
Providing an effective voice for American consumers in an era when special interests dominate public discourse, government and politics. Non-partisan.

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