California Insurance Commissioner Dave Jones told local insurance professionals he has been monitoring the state’s largest health insurers and hopes to soon have the power to reject excessive rate hikes.
The commissioner said some of his actions have already led to delays and decreases by multiple insurance carriers, including Woodland Hills-based Anthem Blue Cross of California.
“We’ve had increases annually here in California the last 10 years—at 10, 20, 30, 40, 50 percent—in the individual small group and the large market, and I think it’s ultimately unsustainable,” Jones said, referring to insurers statewide. “It explains why so many businesses have made the decision they can’t afford to buy health insurance.”
At the Valley Industry and Commerce Association’s Leaders Forum today in North Hollywood, Jones laid out the actions he has taken while assuming his post in January.
He issued an emergency regulation allowing him to enforce that at least 80 percent of premiums in the individual health insurance market is spent on health care costs. He issued another regulation that allows him to prohibit carriers in California from denying coverage to children with pre-existing conditions.
Jones has also requested that some of California’s largest insurers hold off on rate increases, giving him a chance to review their proposals. The requests resulted in Blue Shield of California withdrawing 6 percent increase, it’s third rate hike within the period of a year; Anthem cutting its increase by about 7 percent; and Aetna cutting its increase by about 6 percent, he said.
Jones said what helped him in the review process was being able to not only look over insurers’ actuarial analysis reports, but also their financial statements.
“It seems to me that if California businesses and California consumers are being asked to pay these rates, there ought to be some understanding of the rationale and justification for the rates,” he said.
He added that the five largest national insurers—including Blue Shield, Anthem and UnitedHealthcare, the parent company of Pacificare—reported record profits and shareholder dividends in 2010. He added that Anthem made a 21 percent return on equity last year, which he called a “very, very healthy” return.
Assemblyman Mike Feuer introduced legislation late last year that would allow the commissioner and other regulators to reject health insurance rate increases that are deemed excessive. Jones said having that authority is crucial.
“It would allow me to look at the question of whether or not the rates are excessive from the standpoint of administrative costs and profitability,” he said. “And I think there’s a lot of public interest in giving the insurance commissioner that authority.”