A California health insurer got the green light Tuesday to raise premiums an average of 16% for 38,000 policyholders who buy insurance on their own.
Health Net Inc. will put new rates into effect Oct. 1 after it delayed the increases for three months while state insurance regulators reviewed its paperwork.
The go-ahead from the state Insurance Department comes less than two weeks after it approved double-digit hikes by Anthem Blue Cross and Blue Shield of California. The state has yet to rule on a pending rate increase by Aetna Inc.
The announcement Tuesday highlighted the state's limited power to review insurance premiums, an issue debated in Sacramento.
In this case, the state evaluated whether Health Net properly calculated rates so that it devotes at least 70 cents of every dollar collected in premiums on medical care for its policyholders, as required by California law.
But the state has no say on whether the rates are excessive.
"While we in no way support or endorse the rate increase, Health Net's filing was found to be in full compliance with state law, which allows them to go forward," said Ioannis Kazanis, an Insurance Department spokesman.
Health Net welcomed the news, saying its rates reflect the rising costs of doctors, hospitalizations, medications and other healthcare services. The Woodland Hills insurer would not say how long the new rates would be in effect or how much money the three-month delay cost it.
"The Department of Insurance action reinforces the fact that Health Net's expenditures are spent predominantly on members' healthcare services and that our rate determinations follow all applicable laws and regulations," spokesman Brad Kieffer said.
Health Net subscribers voiced anger at premium notices that already have begun landing in mailboxes.
"If they keep doing this, I'm not going to be able to afford insurance," said Kathy Klossner, 51. She said her rates jumped in July when she turned 51, and they will do so again with the coming increase, pushing her annual cost up 16% — to $2,688 from $2,316. "It's insane."
Aetna also began sending out notices last week to 65,000 California policyholders, even though the state had not finished reviewing the insurer's rate filing. The Connecticut insurer plans to raise rates an average of 19%.
The Insurance Department said it could still delay Aetna's Oct. 1 rate increase if it finds that the company fails to meet the 70% threshold for spending on medical claims.