Health insurance premiums for many Californians are set to increase as much as 20 percent in the coming weeks, according to insurance company reports to federal and state agencies.
The rate increases come as U.S. Supreme Court starts hearing oral arguments Monday on the constitutionality of the federal Affordable Care Act, which became law March 23, 2010, although most provisions have not yet gone into effect. Also, Consumer Watchdog, funded by trial lawyers is trying to qualify an initiative for the state November ballot to mandate government approval of insurance premium hikes.
The California HealthCare Foundation says that health insurance costs increased in 2011 for 38 percent of Californians.
Insurers must submit their planned rate increases with the California Department of Insurance, which does not have authority to approve or reject increases. Recent filings include:
• Aetna individual: average 9.9 percent, overall rate impact 16.4 percent effective July 1
• Aetna small group: 8 percent effective April 1
• Anthem Blue Cross individual: average 6.3 percent, maximum 14.3 percent effective April 1
• Anthem Blue Cross small group: 12.25 percent to 17.85 percent effective May 1
• Blue Shield of California, small group: 5.3 percent, maximum 6 percent effective July 1
• Central United: 9 percent effective "on approval"
• John Alden group: 9.9 percent effective July 1
• Kaiser Permanente small group: 3.4 percent, maximum 5 percent effective Jan. 1
• UnitedHealthcare small group: 7.6 percent effective May 1
Although the state cannot force insurers to change their premiums, it can and does pressure them to do so. Recently, Anthem filed for increases of as much as 30 percent, but under pressure from the Department of Insurance, Anthem lowered its most rate increases from an average of 10.4 percent to 8.2 percent and a maximum 20 percent.
The reduction totals $41.4 million in premiums, according to Janice Rocco, deputy commissioner for health policy.
The federal Health and Human Resources Department, under the Affordable Care Act, reviews and posts online health insurance rate increases of 10 percent or more, although it cannot block rate hikes. Since 2010, the agency has made public more than 180 rate proposals for policies covering 1.3 million individuals and small groups.
Secretary Kathleen Sebelius on March 22 said increases in nine states were unreasonable.
She did not include any California rates in that declaration. The HHS website lists the Blue Shield rate increases as "review complete." The increases for Anthem Blue Cross, California Physician's Service and CIGNA are pending review.
Anthem Blue Cross spokesman Darrel Ng said, "Independent, third party actuaries reviewed (Anthem') original filing and found it in line with the new federal health reform law, Anthem has agreed to modify our rate application…. Periodic rate adjustments are necessary to secure the ability of Anthem to cover medical claims costs and recent mandated benefits on behalf of our members."
C. Duane Dauner, president and CEO of the California Hospital Association, added, "One of the biggest drivers of increasing insurance premiums stems from the chronic underfunding of the Medicare and Medi-Cal programs."
Despite rate increases, the California Small Business Majority said in a press conference Friday that provisions of the federal law, including premium tax credits, rate reviews and medical loss ratio provisions have already helped small businesses save money on their employee health coverage.
However, a Census Bureau report said 58.6 percent of Americans have health insurance through their work compared to 67 percent in 2000. And a report from the Congressional Budget Office and the Joint Committee on Taxation this month said anywhere from 3 million to 20 million Americans could lose employer-paid health insurance by 2022.
The California Watchdog campaign uses insurance rate increases to promote its ballot initiative to give the state Department of Insurance authority to turn down rate hikes.
"Every time insurance companies force another double-digit rate increase on consumers, they make the case for our ballot initiative to rein in excessive rate hikes," said campaign spokeswoman Carmen Balber.
James T. Hay, president of the California Medical Association, countered: "This misguided measure will cause higher rates and lessen access to care…The new state bureaucracy created by the measure will ultimately limit access to patient care and do nothing to address underlying drivers of health care costs."
Thirty-five states regulate health insurance premiums.
What impact the Supreme Court might have on health care costs depends on how the justices rule on whether the government can require individuals to buy insurance and if that mandate is an unconstitutional tax or a permissible penalty; and whether constitutional violations throw out the whole law, part or none of it.
The court is hearing arguments March 26 through 28 and is expected to issue its ruling in June.
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