Powerless State Regulator Badmouths Price-Gouging Aetna for 21% Rate Hike

Friday, July 17, 2015
Department of Managed Health Care Director Shelley Rouillard

Back in December, California Insurance Commissioner Dave Jones said some harsh things about Aetna's double-digit health care premium increases for small businesses but was powerless to do anything about it. On Thursday, it was California Department of Managed Health Care (DMHC) Director Shelley Rouillard's turn to jaw at the giant insurance company for raising rates an average of 21%.

“Aetna's pattern of unreasonable increases equates to price gouging in today's market,” Rouillard said. “I strongly encourage small employers subjected to these unreasonable rate increases to explore more affordable health coverage options.”

Rouillard said she asked Aetna to reduce the increases, but not surprisingly, they refused. The change kicked in on July 1 and affects about 13,000 people employed by small businesses. Rouillard called Aetna a “bad actor” and said the insurer did not provide the state with information it wanted to assess the increase.

It's the fourth time in a year that state officials have said mean things to Aetna about price hikes, but none of it means anything. Last November, 59% of the voting public refused to grant the insurance commissioner the power to do more than rail about high health insurance rates, when they soundly defeated Proposition 45.

Public opinion was decidedly in favor of the initiative until major health insurers and other companies poured $24 million into the campaign in a short period, while proponents raised $450,000.

The California HealthCare Foundation reported last year that premiums for workplace health insurance have jumped 185% since 2002. That was five times the state's inflation rate.

The Los Angeles Times counted six occasions since 2011 that the DMHC has denounced insurance hikes, four of them by Aetna. The rate hikes are staggered among the insurer's customers, so every few months the public is subjected to the spectacle of health insurers complaining about not making enough money. In May, Rouillard denounced Aetna's average 12-month premium increase of 19.2 percent. 

Aetna recently announced it was buying a competitor, Humana Inc., for $37 billion. The deal is target for completion in 2016. It's part of an industry-wide feeding frenzy of consolidation. Anthem Inc. is in discussions to purchase Cigna Corp. and HealthNet Inc. is buying Centene Corp. for $6.8 billion.

Although Insurance Commissioner Jones and Rouillard have no power to block the premium hikes, they might have some input in the pending merger between Aetna and Humana, which will be scrutinized by regulators and attorneys general in 18 states. But Rouillard didn't sound too hard core when discussing the issue with the Sacramento Business Journal. “I am a little concerned with some of the merger mania going on, including Aetna and Humana,” she said.

‒Ken Broder


To Learn More:

State Regulator Slams Aetna's 21 Percent Small Biz Increase (by Kathy Robertson, Sacramento Business Journal)

Aetna's 21% Rate Hike Amounts to "Price Gouging," California Regulator Says (by Chad Terhune, Los Angeles Times)

States Line Up to Scrutinize Aetna's $33 Billion Humana Deal (by Caroline Humer, Karen Freifeld and Diane Bartz, Reuters)

Toothless Insurance Commissioner Growls at Aetna for Big Health Premium Increase (by Ken Broder, AllGov California)

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