The California insurance commissioner ruled that Aetna Life Insurance's 8 percent premium rate increase was "unreasonable" but was unable to prevent the insurer from implementing the hike April 1.
The rate increase is the latest in a string of hikes Aetna has applied, raising premium rates by an average 30.3 percent over two years for 73,000 members in the small group market, reported the Los Angeles Times.
Insurance Commissioner David Jones found the 8 percent rate increase unreasonable because Aetna's projections about medical cost increases weren't supported by its actual claims. Plus, he noted that Aetna saw a 27.7 percent profit last year, the Associated Press reported.
Despite the first-of-its-kind finding, the authority for which was granted under a state law that became effective last year, Commissioner Dave Jones lacks power to prohibit Aetna from implementing its most recent 8 percent rate hike.
Aetna, for its part, isn't backing down from implementing the hike. Jones asked Aetna to postpone the April 1 premium increase, but the insurer implemented it nonetheless, according to the Orange County Register. "While rate increases are never easy, our rates are based on actuarially sound data and reasonable projection of future cost," Aetna said.
Jones responded that he's "disappointed" that Aetna rejected his request to postpone the rate hike. "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," Jones said.
He added that he supports a proposed ballot initiative, which would let voters decide whether to grant the insurance commissioner the authority to reject rates. Consumer Watchdog, which is backing the initiative, has thus far gathered about 300,000 of the 800,000 signatures required to place the measure on the November ballot, the LA Times noted.