CA Major Health Insurers Agree to Lower Rate Increases for Small Employers

Sacramento, Ca (WorkersCompensation.com) - Insurance Commissioner Dave Jones today announced that three of California's major health insurers have agreed to lower their July 1st rate increases. After review by the Department of Insurance and at the request of Commissioner Jones, Anthem Blue Cross, Blue Shield and Aetna have agreed to modify their most recent small group rate increases for this quarter. Small group policies are available to small employers with 2-50 employees. Under state law, the Department of Insurance reviews the rates in order to make a determination about whether the proposed rate is unreasonable, but lacks the authority to reject excessive rate increases.

Anthem Blue Cross has agreed to withdraw its 2.5% July 1st premium increase for small-group PPO products. The withdrawal of the premium increase results in a total savings of approximately $25 million for 45,000 of Anthem Blue Cross' small group policyholders, covering approximately 280,000 individuals. Anthem has raised rates 4.7% on its small group policyholders in the previous twelve months with its earlier rate increases.

Blue Shield Life and Health Company agreed to provide a credit to 58,000 small employers (covering approximately 265,000 individuals) equivalent to reducing its July 1st third quarter rate increase by 1.5%. As a result of the credit, the effective Blue Shield rate increase will be 1.6%, which is Blue Shield's only small group rate increase for its small employer policyholders in the last twelve months. This modified rate increase will save policyholders approximately $15 million.

Aetna has agreed to lower its proposed small group rate from 2.6% down to 1.3% for its 9,200 policyholders (covering approximately 69,000 individuals), which results in a savings of approximately $8 million for small employers.

Small employers have already been billed for July and August for the July 1st rate increases, but will see credits on their August or September bills.

"Lowering health insurance costs for small employers has been and will continue to be a top priority for me," said Insurance Commissioner Dave Jones. "I appreciate Anthem Blue Cross, Blue Shield and Aetna's response to my request that they lower their proposed July 1st rate increases on small employers."

"While this is a positive outcome, it again underscores the need for authority to reject excessive health insurance rate increases. Although I have the authority to reject excessive rates for auto, home, property and casualty insurance, I lack that authority when it comes to health insurance," said Commissioner Jones. "Year after year, Californians and businesses are faced with rate hikes because the health insurers get to decide how high to raise our rates. I urge the State Senate to pass Assembly Bill 52 in its current form, so that Californians don't have to wait until a ballot measure in 2014 to change the law to prevent excessive health insurance rates."

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