Aetna Hikes Health Insurance Rates For California Small Businesses

Health insurer Aetna has raised its rates for California small business clients considerably, making for an average increase of 8 percent, with some businesses seeing increases of as much as 21 percent. The California State Insurance Commissioner called the hikes “excessive.”

Aetna justified the rate hike, which took effect April 1, to the L.A. Times, saying its rates “are based on actuarially sound data and reasonable projection of future cost.”

In a statement, Aetna pulled out the old “taking it seriously.”

“Aetna takes our commitment to our small-business customers seriously, and we are making every effort to maintain an affordable array of products that provide access to quality healthcare services.”

Despite Aetna’s claims that it profited only 13 cents from every dollar of premiums it took in, the company’s California insurance subsidiary raked in a 27.7 percent profit, which was good enough to funnel dividends of $1.7 billion to the mother ship.

The commissioner is using uproar over the rate increase to rally support for a California ballot measure that would give him the power to reject future health insurance rate changes.

Aetna rate hike is deemed ‘excessive’ by California regulator [L.A. Times]

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  1. Herbz says:

    Why don’t we have more non-profit health insurance companies?

    (Also, this is one more reason for single payer)

    • Marlin says:

      Non-profit does not mean they would spend any more on health care; just they would spend it on salary’s/bonus/etc…

      • Herbz says:

        So we should mandate that overhead (including salary/bonus) should not exceed 5-10% or so. I’ve seen figures that put it around that for a non-profit [about 5%]

        Not the 20% that goes into effect in the new bill.

        • Bsamm09 says:

          Why 10% and please show me what non-profits have overhead of 5%. That means if you take in $100,000,000 as a charity you have to spend $90 million on charitable causes or in the insurance company example; healthcare.

          I’d be interested in seeing you run a insurance company that could process $90 million worth of claims; have a customer support center for both providers and insured, have any sort of fraud protection, have buildings that use electricity etc, etc. on a $10 million budget.

          • Herbz says:

            Medicare operates with 3% overhead, non-profit insurance 16% overhead, and private (for-profit) insurance 26% overhead. Source: Journal of American Medicine 2007

            I’m sure they could get it down lower if they tried (or maybe they could match Medicare’s 3%?)

            • Herbz says:

              Also:
              The current system of private, for-profit insurance spends 26 cents of every dollar on bureaucracy and paperwork. By streamlining payment through a single non-profit payer, it would save over $350 billion per year, a substantial amount of money which could be better spent on health care.

              Source: http://www.healthpaconline.net/health-care-solutions.htm

              • dwtomek says:

                Socialisms! If I’m going to be taken out of this world by a debilitating but treatable disease it’s damn sure going to be on my own inability to afford care!

            • huadpe says:

              The overhead of an insurance company boils down to three parts:

              Bringing money in,

              Preventing fraud,

              Customer service.

              Of these, Medicare has no cost for the first (collections and marketing are done by the IRS and SSA respectively), For the second, medicare has low costs by being chronically awful about fraud prevention. For the third, their costs mirror those of a private insurer for the most part. They also have some economies of scale resulting from being the biggest insurer in the country by a mile.

    • frank64 says:

      I don’t think it matters. The non-profits are just as expensive. The insurance industry is taking the blame while the rest of the medical industry jacks up prices and hides behind them. The insurance system the way it is enable the price increases, most of the new health care proposals will continue and maybe exacerbate the problem.

    • AldisCabango says:

      Because we know what a wonderful job the government does with medicare and medicaid.

      • nearly_blind says:

        Ignorant Americans and commentors want Private insurance (no government single-payer), but then complain when these private companies want to actually set their own prices, decide who and what they will cover, etc.

      • PunditGuy says:

        You mean the low administrative costs compared to the public sector? I know, right?

        This chaps my ass like few other things. Private industries insure Americans while they’re working, and — consequently — of working age. So they get a pool of people who are, statistically speaking — at their prime. And just as they’re getting old enough to be guaranteed to need health care? Congrats, government — they’re all yours. And it’s somehow government’s fault that medical costs are rising, so the people that they’re covering are expensive to cover.

        Tell you what — let the government have people of all ages. A real insurance pool of 300 million people. They can spread the risk to everyone in the country. What could possibly be more efficient than that?

    • yabdor says:

      I’m afraid I can’t remember the whole presentation but PBS (allegedly) was going to do a special on non profit medicine and the various countries that use it. After all was said and done it was determined that the Japanese non profit model worked especially well. PBS was pressured not to air it and they didn’t.

  2. coffeeplease says:

    I’m handling the renewals for the small business I work at in NYC, there are about 10 employees. Some plans are surging as high as a 55% increase, another 36%, and the remainder around 15%. The owner fully pays for the coverage but we’re at the point where we’re bordering on being unable to pay the full amount…over the past 3 years rates have increased at least 55% across the board. I’m fully in favor of single payer as these rates are bordering on criminal.

    • VashTS says:

      I am wondering, why is it you think rates have skyrocketed so high. I too, live in NYC, uninsured but curious why you think the rated surged so dramatically for the plans for the small business you work at?

      • coffeeplease says:

        I honestly have no idea, all of our employees are young-ish…mostly mid to late 20s so they weren’t having lots of health issues or anything, I think we had one broken arm (soccer injury) over the past 6 years. I’m the oldest at 41 w/no health issues either so it’s not like one employee (or multiple employees) are claiming so much that it’s causing our rates to surge.

        Again, I suppose that’s why I think the whole thing is criminal.

  3. AngryK9 says:

    Of course they’re going to jack up their rates. The fed is doing everything it can to make it mandatory for everyone to have to have health insurance. When that stupid idea was conceived and put out to the general public, that’s when insurance companies started jacking their rates. Hell, my father’s AARP insurance has gone up almost $200 a month since that ridiculous law was announced.

    • Herbz says:

      And this is why we need single payer (or outlaw for-profit insurance.)

      Insurance companys aren’t looking out for your best interest. All they want is your money.

    • Marlin says:

      Let see, rates were going up before the law was passed and they have gone up after it was passed but has not gone into full effect.

      yep its “that ridiculous law” that is causing this.

      /rolleyes

    • Awesome McAwesomeness says:

      First, correlation does not equal causation. Also, Republicans conveniently forget that insurance prices have been going up steadily for years now b/c they just want to demonize Obama instead of being a reasonable human being and thinking through what the actual problems might be. For about the past 5 years (pre Obama), our insurance has gone up year after year to the point where we had the top level insurance back then for the same price we have the lowest level now. The price of the really good insurance has doubled. Our friends and family have experienced the same.

      One of the actual problems is that with the recession, many people had no choice but to drop their insurance so they could make ends meet. Never mind all the people who lost their insurance due to job loss. Many of those people go to ERs for medical care and can’t pay the bill. Hospitals then jack up their prices to cover for those who don’t pay, which passes on to those of us who have insurance. So, the hospitals are getting their money. It’s just those of who are insured are paying for those who aren’t.

      Another problem is that many insurance companies are traded publicly, so like any business they must find ways to get their stock holders increasing dividends. If they can’t skimp on care, they have to raise rates enough to not only cover increasing medical costs, but to pay those extra dividends to shareholders.

  4. Blueskylaw says:

    “”are based on actuarially sound data and reasonable projection of future cost.”

    BULLSH*T

    • vastrightwing says:

      Yes, just like the financial industry used realistic risk ratings. It’s time for the government to give the insurance industry its own nipple off the pig. A gift from the government to the insurers that says, we give you every denizen of the United States. They must jack rates up as high as possible so they can rape us as much as possible going forward. By setting the bar high now, they ensure ample money going forward. In return, the government gets a cut, which they call a “regulatory” fee. This is a sham, plain and simple. Unlike a regular consumption tax, we will be forced to be insured. The analogy would be like the government taxing cigarettes and then forcing us to buy them and smoke them. Our “health care” system is a thinly veiled attempt to rape the tax payer. It is that simple. The pretext, of course is that we will get health care. Anyone like the health care we already have? I bet not too many do.

    • SecretShopper: pours out a lil' liquor for the homies Wasp & Otter says:

      “are based on actuarially sound data and reasonable projection of future cost, the metrics of which we will be keeping completely secret so as not to reveal the usurious nature of our business

      FTFY

      oh and yeah total Bulls*it

      • Blueskylaw says:

        I once did a report on Bank of America and ATM industry. The banks keep crying about how much money they lose on ATM transactions and how they only provide the service as a convenience to their customers and yet the average profit (yes, profit) per ATM transaction is impossible to find. I looked for months and couldn’t find a number. I finally contacted someone high up in the industry who helped me with a lot of information but he would not tell me what the average profit was and said if I wanted to find out I would have to buy an industry report that cost roughly $15,000.

        So yea, when they cry poverty but keep the information under security tighter than Uncle Scrooges purse strings, then as far as common sense goes, they are full of sh*t.

        • SecretShopper: pours out a lil' liquor for the homies Wasp & Otter says:

          wow 15k for a report, they must be making a mint from ATM fees. Also that report is probably about as real as a unicron I bet no one as ever even seen it because of the huge fee, consumer reports should pony up the cash & call thier bluff.

  5. dolemite says:

    On one hand, I hate increases. On the other, I like them. Why? Because of all the “real americans” that say they don’t want the government to get involved in health insurance just because THEIR plan is currently affordable. It’s only a matter of time before all plans are unaffordable except for the richest americans. You can’t have wages decrease or remain stagnant and insurance going up 5, 10, 25% a year.

    • OutPastPluto says:

      My position regarding socialized medicine is based on my experiences with it, rather than some false straw man you would like to prop up. It’s just not a thing that Americans do well.

      You seem to be pretending that we don’t already have bad examples to judge from.

      Military. Universities. VA. Medicare. Medicaid. Disability.

      Doctors already want to flee from what socialized medicine we have despite the fact that private insurance companies would make Crassus Maximus himself blush.

  6. consumed says:

    The profit-based health care system in the USA needs to be completely dismantled and rebuilt. The earnings need to be reinvested back into the health care system and not given to the executives. I’m moving to France.

  7. dwtomek says:

    It begins again! I can’t wait to see my rate hikes! I’m hoping for a solid 18% again for consistency’s sake. What a fucking joke…

  8. dwtomek says:

    It begins again! I can’t wait to see my rate hikes! I’m hoping for a solid 18% again for consistency’s sake. What a fucking joke…

  9. Green Beer Day says:

    What do you think happens when you give something away for “free”? Whomever actually pays for it, pays more.

    Example: Lasik surgery is not covered by most health insurance plans. The cost 10 years ago was ~$5,000. Demand has increased dramatically since then. The cost today ~$2,500 (less if you’re brave enough to use a Groupon). Had it been included as part of an insurance plan mandate the cost would still be $5,000.

    There is no room for competition when something is given away. It renders competition moot and prices stagnate while innovation also drops. Pure competition is best (we don’t have that now – it’s still very much an oligarchy and in some states a monopoly. Where are the foreign health care insurance providers?

    • dush says:

      We can’t even buy from a provider in another state, let alone another country.

    • JiminyChristmas says:

      This is a ridiculous, simplistic argument.

      Health care is not a typical consumer good, though your example of cosmetic surgery is. Even if health care were “free”, I wouldn’t want more of it. I don’t want any more interaction with the medical world than I absolutely need. Let’s try your LASIK analogy with a different procedure: colonoscopies. If anyone could get a free colonoscopy would people be busting down the doors to get as many as they could? How about open heart surgery? Or dialysis? No, because medical procedures aren’t the same as Apple gadgets.

      A theory of supply/demand that makes sense for consumer goods doesn’t make sense for medical interventions. Pretty much everyone will receive medical care. Likewise, they will get that care not because they want it, but because they need it. The consequence of not buying the care is suffering, disability or death. How’s that for inelastic demand? What you’re saying about competition is based on an economic theory. Reality provides plenty of actual evidence that contradicts the theory: All of the countries that have single-payer systems, spend less on health care per capita, and have better health outcomes.

      • dush says:

        The idea is that it is “free” as in subsidized and separated from the consciousness of the one demanding the service.
        If things were in a free market people who needed the service would be able to shop around and find the best price/quality. It would encourage competition and prices should over time go down or at least quality keep going up to attract customers.
        Now though, the government just funnels money through insurance corporations to medical facilities and cost over runs and mismanagement are not able to be corrected by consumer choice.

  10. schiff says:

    I work for a small business in NYC. We have Aetna as our only option. I’m responsible for 40% which is approx $470/month. TBH I almost need a second job just to afford the insurance. When is someone in government going to address the issue? Why is pricing dependent upon the number of participants at a company? It’s as corrupt a system as they come and people like me are stuck dealing with it.

    • Herbz says:

      Send a letter to your representatives saying you want something better… say Single Payer?

      • dwtomek says:

        Might as well ask for a blowjob and a bagel while you’re at it. You might actually get the bagel.

    • dolemite says:

      Where I work, it’s $950 a month for a family, with $3,000 deductible PER PERSON PER YEAR. That doesn’t include the prescription deductibles. And this is a 250 person company.

      Needless to say, most people simply can’t afford to have insurance here…they could put their whole paycheck towards it and it wouldn’t cover it.

  11. dush says:

    So lets mandate we all become customers to Corporate Health Insurance. They’ll surely lower the rates back down. Right?

  12. Alliance to Restore the Republic of the United States of America says:

    Moving. Norway anyone? Costa Rica? Sweden? Germany?

  13. nearly_blind says:

    There’s a fundamental reason why small business insurance costs more ‘actuarially’. The choice of getting insurance for a small business is more similar to an individual than a large business. The small business owner is more likely to get insurance or better insurance when he sees a need for his family or one of a group of close knit employees. This makes these customers more likely to need medical care and cost more on average than a big-company employee. E.g. Small business owner reasoning: my wife needs a hysterectomy in the next 2 years … well I better get an insurance plan or a better plan.
    This type of effect doesn’t apply to a large company.

    • dwtomek says:

      So it isn’t because the insurer has more to lose by pissing off a massive business than a small business? Hint: that is the actual reason.

  14. nybiker says:

    Just the other day, I started reading “The Company That Solved Health Care.” It’s written by John Torinus, Jr. who is the Chairman of Serigraph. He has come up with what appears to be a successful model for saving money and getting good health care for him & his employees.
    At this point I would say it’s definitely a book that should be read by all of us.
    To quote Sy Syms, “An educated consumer is our best customer.” We need to have quality reports and pricing information available to us so that we can all become educated consumers of not just cars and cell phones, but our medical care.

  15. AllanG54 says:

    I’m with Oxford, last year I got an increase of about 14% and with that increase they said they already applied for another 11% for this year. Right now I’m paying $1212 a month. So, I’ll be looking at about $16,000 a year by Septempber.

  16. Alliance to Restore the Republic of the United States of America says:

    How long until people just decide to start showing up at emergency rooms with a fake ID, get care, then split?

  17. Lyn Torden says:

    This is way more cost than in Sweden.

  18. kataisa says:

    Thanks for the change, Obama.

  19. ericfate says:

    Insurance rates are dictated by hospital costs. The larger the hospital network, the more clout they have to determine how much their services are worth, by being able to simply threaten not to participate with the insurer at the end of their contract term.

    If they decide they are going to cost more for the new term, the insurance company then has to evaluate whether or not there are enough alternatives in the area to allow their customers the same access to care without doing business with that hospital network. If the answer is no — you get a rate increase.

    I do appreciate that the commissioner is maintaining a hard line on this. It has forced all of the non-profits to really step up their game and start working with one another to try and force hospital costs back down. I just hope the rest follow suit and don’t just decide to make up their losses by simply firing everyone and outsourcing the entire company to India.

  20. kimmie says:

    I suppose it could be worse. Anthem Blue Cross of California dropped a ton of contracts with providers shortly after my small business renewed with them. It severely limits which local hospitals and pharmacies we can use. I understand they’re a business, but they keep denying standard claims, so I don’t know how they’re actually providing ‘insurance’. All it does is discourage me from going to the dr.