Mass. panel overturns cap on insurer's premiums; Calif. finds 'substantial' errors in planned premium increase

The Boston Globe: A Massachusetts "insurance appeals board yesterday overturned the state's cap on health premium increases for small business and individual customers covered by Harvard Pilgrim Health Care." The panel "found that rate increases Harvard Pilgrim initially sought in April are reasonable given what it must pay to hospitals and doctors. That ruling trumped the Insurance Division's earlier finding that the requested increases were excessive, a view that reflects Governor Deval Patrick's campaign to curb health costs. Insurers yesterday cheered the ruling" (Abelson and Wallack, 6/25).

Meanwhile, in California, Aetna ran into trouble about its plans for a rate increase.

The Sacramento Bee: "The Department of Insurance said it found 'substantial mathematical errors' in the rate filings submitted by Aetna, which had planned to raise premiums by an average of 19 percent on 65,000 Californians who buy insurance on their own. As a result of the latest errors, Insurance Commissioner Steve Poizner said he would 'take the exceptional step' to post future rate filings on his agency's website to allow for easier public review. … It was the second time in as many months that the department uncovered flaws in calculations used by a major health insurer - intensifying calls by industry critics clamoring to give state regulators the authority to review rates before they are imposed on consumers" (Calvan, 6/25).

The Associated Press: "The mathematical errors resulted in inflated rate hikes, but it's unclear how far off the rates were because the insurer withdrew the rate hike before the review was completed, Department of Insurance spokesman Darrel Ng said." Poizner this month called for a review of premium increases by the four largest insurers in the states, which control 90 percent of the market. "In a statement, Aetna said it conducted a third round of internal reviews of the rate hike and 'found a miscalculation not previously detected. This was simple human error.' ... In California, insurers are required to spend 70 cents of every dollar collected in health insurance premiums on medical benefits" (Mohajer, 6/24).

The Wall Street Journal: "The increase, filed in March and scheduled to go into effect July 1, would have hit 65,000 policyholders. A spokesman for Mr. Poizner said it was too early to say what impact the miscalculations had on the proposed percentage increase. The request followed a 17% average increase last year" (Johnson, 6/25).

The Los Angeles Times: "Aetna's decision comes amid efforts by state and federal officials to clamp down on soaring rate hikes for individual policyholders and small businesses. The nation's new healthcare law gives the Health and Human Services secretary the authority to review 'excessive' premium increases, without defining the term. The law also will require insurers to spend at least 80% of their premiums on medical care. Lawmakers in Sacramento and Washington are debating new bills that would beef up regulators' authority to approve or deny rates" (Helfand, 6/25).