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3 health insurers agree to 60-day delay on rate hikes

Aetna, Anthem Blue Cross and PacifiCare agree to put off premium increases for people with individual policies while they are reviewed by the California insurance commissioner.

January 27, 2011|By Stephen Ceasar and Duke Helfand, Los Angeles Times

Three of California's largest health insurers have agreed to delay for 60 days planned rate hikes for thousands of customers after state Insurance Commissioner Dave Jones asked for time to review the increases.

Aetna, Anthem Blue Cross and PacifiCare agreed to delay the increases for people with individual policies. Unaffected are workers insured through their employers. None of the three insurers had any immediate comment.

The announcement Thursday was in contrast to a decision Jan. 15 by Blue Shield of California to defy the commissioner and go ahead with increases that could total up to 59%.

As for Blue Shield, the San Francisco-based nonprofit, Jones said its policyholders "will not have the benefit of this additional review period to ensure compliance with the law, but I will do what is within my power to determine whether Blue Shield's proposed rates are in compliance with the law and to enforce that law."

The company is moving ahead with rate increases for the third time since October. Some of its 194,000 individual policyholders were notified recently that they would receive all three at once.

Blue Shield spokesman Tom Epstein replied that an independent actuarial review of its rates requested by the company is on track to be completed before March 1.

"As we stated previously, if the independent review finds that the rates are not sound, we will hold our members harmless by refunding the difference with interest," he said. "… Even with the proposed rate increases, we expect to lose $20-30 million on individual health insurance in 2011."

Woodland Hills-based Anthem has said it planned rates hikes to take effect April 1 that would average 9.8% for 638,000 individual policyholders. The company, the largest for-profit health insurer in California and a unit of Indianapolis-based WellPoint Inc., did not disclose its maximum increases.

Aetna Inc. had said it planned April 1 increases averaging 20.7% for a portion of its individual business. The Hartford, Conn.-based company raised individual rates an average of 19% in October after delaying the increase for three months. The maximum rate was 30%.

Cypress-based PacifiCare, a division of UnitedHealth Group of Minnetonka, Minn., said it planned to raise premiums 2% to 9% as of Jan.1, a spokesperson said.

The insurance commissioner has limited power to block increases, something he can do only in cases in which an insurer spends less than 70% of premiums on healthcare expenses.

Jones said in a statement that his department "does not have the authority to reject excessive premium increases" but will review rate filings to determine if the proposed rate is "unreasonable" and to post that information on his website.

Additionally, Jones in his first day in office issued an emergency regulation that would give him the authority to enforce a new federal 80% medical loss ratio in the individual market.

"Although I do not have the authority to prevent excessive rate increases, these rate filings will be reviewed to ensure compliance with the new law that requires that 80 cents of every premium dollar is spent on providing healthcare and to determine whether the proposed rate increase is unreasonable," he said.

"These rate increases come at a time when many Californians are still struggling to get by in tough economic times," Jones said, "so it is especially important to work to prevent unreasonable rate increases from going into effect."

stephen.ceasar@latimes.com duke.helfand@latimes.com

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