Insurance Regulators in CA Cracking Down On Medical Insurance Rate Increases
Posted on Wed, Jun 23, 2010
Anthem Blue Cross, Blue Shield of California, Health Net and Aetna will now be subject to an additional review of their proposed rate increases by actuaries that are independent of these medical insurance companies.
These four medical insurance companies cover approximately 90% of the individual medical insurance market in California.
This is in response to Anthem Blue Cross's proposed rate increases of up to 39% this past March. The California Department of Insurance had sent the rate increase filing to an actuary outside of the insurer, and discovered errors in its filing. They found that Anthem Blue Cross had tried to bill customers 50% more than the state of California allows. Because of this, Anthem Blue Cross did not go through with the proposed rate increases.
Auto and homeowners insurance plans need to have approval by the state insurance department before adjusting its rates, yet in California, medical insurance companies have not been required to get approval. However, the law in CA requires that each insurer maintain a 70% loss ratio, which means that 70 cents of every dollar that is obtained through premiums is to be used on medical benefits.
Medical insurers state that the premiums that they charge are in direct correlation with the increasing cost of medical care. Research organizations in California that are non-partisan have said that there is a huge market power of hospitals which are driving the costs up.