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Aetna Pulls California Rate Hike

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Aetna Inc. has withdrawn a rate filing in California that would have increased individual health care insurance rates for 65,000 customers by an average of 19% percent, state Insurance Commissioner Steve Poizner announced.

The company withdrew its filing after its own actuarial review found “substantial mathematical errors” in calculations used to request the rate increase, Poizner said.

“First, we found major problems with the Anthem Blue Cross rate filing,” said Poizner. “Now, additional scrutiny has revealed that Aetna’s filing has significant mathematical errors.”

In addition to Aetna, Hartford, and Anthem, a subsidiary of WellPoint Inc., Indianapolis, California has received rate increase applications from Health Net Inc., Woodland Hills, Calif. and Blue Shield of California, San Francisco.

As a result of the two reported errors, California’s Department of Insurance will post future individual health insurance filings on its Web site, Poizner said.

“I’m hopeful this public disclosure will add additional pressure on insurers to avoid errors,” he said.

Poizner announced last week that the rate filings of Aetna, Anthem Blue Cross, Blue Shield and Health Net, the 4 largest individual health insurers in California, would be given an additional level of scrutiny by an outside actuary. Unlike auto and homeowners insurance rates, health insurance rates do not require prior approval by the state DOI. However, state law requires that 70 cents of every $1 collected in health insurance premiums be spent on medical benefits.

Aetna says it found the miscalculation after it conducted a third round of internal actuarial reviews on its individual rate filings in California and that even with the mistake, it was paying more than the state’s required minimum for medical benefits.

“This was a simple human error,” the company said in a statement. “The original rate filings supported a loss ratio in excess of the 70% minimum. The correction of the data also supports the [medical loss ratio] requirement.

“As soon as we uncovered this mistake, we informed the California Department of Insurance. There is no impact to our members with individual health plans in California. We have not yet implemented the proposed rate changes.”

Aetna added that it is continuing to cooperate with the state DOI on reviewing it filings.


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