Small Businesses Stuck With Unjustifiable 8% Rate Hike, 30% Increase Over Last 24 Months Says Department of Insurance
SANTA MONICA, Calif., April 5, 2012 /PRNewswire-USNewswire/ -- The California Department of Insurance has announced that Aetna is imposing an 8% annual health insurance rate hike on its small business customers despite state actuaries' findings that the increase is "unreasonable" and not supported by data. Consumer Watchdog Campaign says this demonstrates the urgency of voters passing its proposed ballot measure to make health insurance companies justify their rate hikes and get permission before raising rates. The initiative, which is currently being circulated for signatures to place it on the November 2012 ballot at grocery stores and online at JustifyRates.org, would allow the Insurance Commissioner to reject a rate hike such as Aetna's if state experts find it unreasonable.
"Until the Commissioner is allowed to say no to unjustified and excessive rate hikes, small businesses and families in California will continue to pay more than they should for health insurance," said Jamie Court, proponent of the proposed ballot measure and a director of Consumer Watchdog Campaign. "Aetna's rate hike is the poster child for why health insurance should be required to get approval before rate hikes take effect."
According to the Department of Insurance, the Aetna subsidiary that sells health insurance in California earned huge profits in 2011 and paid a $1.7 billion dividend to its parent company last year. Additionally, while the insurance company claims that it needs the rate increase to cover increasing medical costs, Aetna's own data and documents don't support that claim, which also conflicts with national data about medical cost inflation.
The ballot initiative being circulated by Consumer Watchdog Campaign would require insurance company CEOs to justify under penalty of perjury that rate hikes are necessary and allow the Insurance Commissioner to reject any hike determined to be excessive. Similar rules have applied to auto and home insurance in California and have saved motorists in California over $62 billion since 1988 when that law took effect. The initiative also prohibits the use of unfair rating factors in health, home and auto insurance.
"Insurance companies like to say that there is already regulation of health insurance in California, because insurers are required to make their rate increase plans public. But if a company can ignore official findings that a rate hike is unreasonable and jack up rates whenever they want, then the law needs to change," said Court.
The petition to place the initiative on the ballot can be signed outside supermarkets or by going to www.JustifyRates.org and downloading the one-page petition.
Consumer Watchdog Campaign is chaired by insurance reform Proposition 103 author Harvey Rosenfield. Consumer Watchdog Campaign is the campaign affiliate of Consumer Watchdog, which was founded by Rosenfield and whose president, Jamie Court, an award-winning consumer advocate and author, is the proponent of the proposed ballot initiative.
SOURCE Consumer Watchdog Campaign