Two health carriers are saying they have no choice but to raise rates in California, in spite of Golden State regulators’ objections.
California Insurance Commissioner Dave Jones and Brent Barnhart, the director of the California Department of Managed Health Care, have been trying to get Blue Shield of California to reduce an 11.8 percent managed care plan increase and an 11.7 percent health insurance plan increase.
Barnhart has been trying to get Aetna Inc. (NYSE:AET) to reduce an 11.4 percent increase.
The Aetna increase is set to take effect April 1 and affect 20,000 small group managed care plan enrollees.
The California Blue Shield increases took effect March 1 and affected 27,000 individual managed care plan enrollees and 268,000 holders of individual policies.
Jones has noted that the California Blue Shield increases could be as high as 19.9 percent for some policyholders who move from one age category into another.
Jones and Barnhart have called the increases unreasonable.
But California law and the federal Patient Protection and Affordable Care Act of 2010 (PPACA) rate review rules simply give states the authority to review proposed health rate increases and publish information about the increases, not to reject increases or to require carriers to reduce the increases.
“I am disappointed that after lengthy negotiations, Blue Shield and Aetna were unwilling to bring their proposed health plan increases down to a reasonable level,” Barnhart said in a statement.
Jones, who has been fighting for the statutory authority to reject and reduce rate increases, said Californians will continue to see ever rising rates until the rate review law is changed.
California Blue Shield has projected administrative costs of 20.2 percent, and those are the highest among major carriers in the individual market, Jones said.