One Chance for CA Regulators to End Outrageous Aetna Premium Hikes

California health plan regulators have a rare opportunity to protect consumers from excessive and unjustified premium hikes by one of the worst offenders in the state. But will they use that power? 
 
For a proposed Aetna-Humana merger, the Department of Managed Healthcare recently held a public hearing. Similar to an earlier hearing on a proposed merger between Centene and Health Net, executives with Aetna and Humana claimed that the merger will increase competition, improve care and benefit consumers. Unfortunately, Aetna has made those assertions before and failed to live up to them. In a 1998 merger between Aetna and Prudential, executives made similar promises, but there was an immediate 7 percent hike in premiums after the consolidation and the quality of care did not increase. 
 
In a letter sent to DMHC on Monday, Consumer Watchdog urged the agency to use its authority over the proposed merger to enforce a binding agreement that the combined company will not implement any rate hikes that are deemed unreasonable by regulators. Aetna's track record screams for stringent safeguards when it comes to rate hikes. 
 
In 2015, Aetna cost small businesses a projected $68 million in unjustified and unreasonable rates, according to the Department of Insurance and the Department of Managed Health Care. 
At the hearing, Shelley Rouillard, director of DMHC, was forced to point out the obvious. 
 
"Aetna has shown a pattern of moving forward with premium rate increases the DMHC has found to be unreasonable or unjustified, " she said. "I can assure you rates are something that we will be looking at and considering as part of our review." 
 
Rouillard should do more than consider it. The agency along with the Department of Insurance, which will hold a hearing on the deal later in the year, should demand final say on rate increases. 
 
Since 2012, health insurance companies have imposed more than $355 million in rate hikes deemed by the DMHC and the CDI to be unreasonable. Neither department has the authority to reject excessive rate increases.  In 2014, insurance companies spent $56 million to defeat Proposition 45, which would have required health insurance companies to open their books and justify rates, and allow state regulators to reject excessive increases.
 
Regulators may not have the ability to reject excessive rate hikes, but in the Aetna merger, they have the leverage. They should use it. 

Capitol Watchdog is owned and operated by nonprofit Consumer Watchdog. For more information about Consumer Watchdog visit http://www.consumerwatchdog.org

 
 

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