Good News for California Health Insurance

Californians were happy to get some good news today, as health insurance company Aetna withdrew its plan to raise insurance premiums by as much as 19% when it was discovered that their calculations of next year's medical costs were skewed based on clerical errors.

California health insurance has already been in news quite a lot this year, when WellPoint Inc., made a bid to raise individual insurance rates by as much as 30% in April. The resulting public outcry led to heavy criticism.

Wellpoint's response was that their premium hikes reflected the rising costs of medical care.

At the time President Obama used WellPoint's rate hike to justify the need for a new health care system. The resulting bad press led the company to withdraw their proposal.

This new proposal by Aetna was reviewed by Insurance Commissioner Steve Poizner's office, based in part on his promise that independent reviews of all new rate hikes for individual policies would be conducted for California's four biggest insurers.

His office discovered that the insurance rates were compounded incorrectly in Aetna's projection of their medical costs, which had resulted in inflated costs for the next year. It isn't clear exactly how inflated these costs were, since Aetna withdrew their proposal right away.

Aetna's response to the discovery of the error was to call it a "simple human error" and go back to the drawing board for new projections of next year's costs.
Other insurance companies awaiting reviews for their projected costs include Blue Shield, Blue Cross, and Health Net. Like Aetna, these insurance companies are concerned that controlling what they charge in premiums, while the costs of medical care continue to go up, will hurt their business.

However, supporters of the reviews argue that only insurance premium rate hikes that exceed the rate of medical inflation will be so carefully scrutinized.
Poizner has also suggested that his office will post future health insurance filings such as these on the Department of Insurance's website, so that the public can see how much insurance companies want to charge them for coverage. This will, according to Poizner, "minimize rate increases" and keep the health insurance market more competitive.

While costs in the last year for individual health insurance have reportedly gone up substantially, these new efforts to scrutinize rate hikes and hold insurance companies responsible for what appear to be inflated costs will save Californians thousands of dollars on their medical coverage.

* Please refer to our legal terms and conditions for disclaimers pertaining to the content on this page.