In California, news on health insurance rates travels fast
By: Maryalene LaPonsie
It's been a tough couple of months for California health insurance companies. First, the passage of federal health care reform imposed new requirements and restrictions in an effort to create affordable health insurance. Then, a string of questionable health insurance rate hike requests were filed by California's largest companies, including Aetna and Anthem Blue Cross.
Now, the California Insurance Commissioner is planning to broadcast health insurance rate increase requests and other breaking insurance news to anyone who signs up for regular email updates. The plan is part of an effort to increase transparency in the rate review process. It also signals that it's open season on insurance company rate filings. As Insurance Commissioner Steve Poinzer said in a statement, "We want as many people as possible scouring these rate filings to ensure they are mistake-free."
A history of botched health insurance rate increases
If you are tempted to feel bad for California health insurance companies - after all, the commissioner has all but called for the hounds to ensure that future rate increases are justified - remember that the companies brought this upon themselves.
It started with Anthem Blue Cross of California and its plans to jack up health insurance costs by up to 39 percent for those with individual plans. The number raised eyebrows, including those of Health and Human Services Secretary Kathleen Sebelius. As political pressure mounted, parent company WellPoint Inc. withdrew the request. An independent review later showed that the request had math errors that resulted in what many believed were excessive rate increases.
WellPoint has since resubmitted its health insurance rate request with a more 'manageable' increase of 20 percent for individual policyholders. Fortunately for the company, the delay in approving the request hasn't seemed to hurt its bottom line. WellPoint reported $1.6 billion in net income for the first half of 2010, a 26 percent increase from last year.
Meanwhile, Aetna did not learn from WellPoint's mistakes when it too submitted faulty documentation for a rate increase in California. After finding math errors, Aetna withdrew its request only to resubmit a revised plan that included an identical top increase of 18.7 percent for its individual plan policyholders.
Shining a light on health insurance rates
All this is enough to make some wonder, wasn't health care reform supposed to bring affordable health insurance? It certainly must be what Commissioner Poinzer was thinking when he opened the health insurance rate request process to the general public. While the Insurance Commissioner lacks the authority to approve or deny rate filings, he can take steps to ensure that companies are spending the required minimum 70 percent of their premiums on health care costs rather than salaries and administration.
That is where California hopes you can help. Commissioner Poinzer has appointed a third-party actuary to review insurer numbers for accuracy. In addition, the Commissioner intends to post all rate filings online and to send email blasts to participating consumers and consumer advocates whenever rates are expected to rise. With all those eyes looking over the filing numbers, you can only hope that future medical health insurance rates will be both fair and accurate.
For more information or to sign up for email updates, visit the California Department of Insurance website.