1.5 Million Californians to See July 1 Health Insurance Premium Increases, Some as High as 92.5%, State Powerless to Stop Hikes

Rate Regulation Bill To Rein In Excessive Premiums Nears Key Vote In California Senate

SANTA MONICA, Calif., June 28, 2011 /PRNewswire-USNewswire/ -- More than 1,500,000 Californians will face health insurance premium increases on July 1 averaging 3% to 17.4%, according to state filings. Some patients with Aetna small business plans will see premium increases as high as 92.5%. California insurance regulators need the power to protect consumers and deny such steep rate increases when they are found to be excessive or unjustified, said Consumer Watchdog.

AB 52 (Feuer) would require a health insurance company to get approval from the elected insurance commissioner before a health insurance rate hike takes effect -- subjecting health insurance rates to the same strict rate regulation that auto, homeowners and other insurance companies already comply with in California. The bill will be heard in the California State Senate Health Committee Wednesday afternoon. The majority of states have the power to reject unreasonable premium hikes, but not California.

"This is an urgent life and death issue for those Californians who face premium hikes Friday as high as 92% because California is one of the few states without premium regulation," said Consumer Watchdog president Jamie Court. "Californians will continue to be held hostage by profiteering health insurance companies if the legislature does not grant the elected insurance commissioner the power to stop arbitrary and unnecessary premium hikes."

In recent years, health insurance policyholders in California have seen repeated massive rate hikes like those set to take effect Friday, even as medical inflation has been fairly low. Consumer Watchdog noted that these skyrocketing rates have coincided with ever-increasing profits for insurance companies. According to Aetna's rate filing, the insurer's 2011 company-wide rate of return is projected to be 24.8%.

A Consumer Watchdog report finds that rate regulation is necessary to hold down excessive rate increases. In Massachusetts for example, where health reform including an exchange and individual mandate was the model for national reform, insurance premiums continued to increase until prior approval rate regulation was enacted to moderate increases. Download the report: "Health Reform and Rate Regulation: Can't Have One Without the Other," here: http://www.consumerwatchdog.org/blog/our-plan-reducing-health-insurance-rates

AB 52 would require insurance companies to get permission before implementing any hike and would allow state regulators to deny or modify rate changes determined to be excessive. Health insurers that are increasing rates on patients July 1 have lobbied heavily against the bill, which authorizes insurance regulators to review insurance company profits and overhead as well as company projections about future health care costs in order to determine whether or not to allow a rate increase to take effect. It also allows members of the public to challenge proposed rate hikes.

AB 52 would enact rules for health insurance that are similar to Proposition 103, which requires the Insurance Commissioner to regulate auto and other property/casualty insurance rates. Under those rules California motorists have saved more than $62 billion on their auto coverage over the past two decades, according to a 2008 report by the Consumer Federation of America.

Click here to view a chart of July 1 rate increases: http://www.consumerwatchdog.org/newsrelease/15-million-californians-see-july-1-health-insurance-premium-increases-some-high-925-stat

Consumer Watchdog is a nonpartisan consumer advocacy organization with offices in Washington, D.C. and Santa Monica, CA. Find us on the web at: http://www.ConsumerWatchdog.org

SOURCE Consumer Watchdog