Three major California health insurers have agreed to comply with Insurance Commissioner Dave Jones' (D) request to delay their planned premium increases for 60 days, the Los Angeles Times reports.

Background

Aetna, Anthem Blue Cross and PacifiCare all recently submitted notices about their plans to raise rates for members with individual health insurance policies (Ceasar/Helfand, Los Angeles Times, 1/27).

The insurers' rate filings show that:

• Anthem proposed raising premiums by an average of 9.8%;


• PacifiCare proposed raising premiums by between 2.5% and 9.1%; and


• Aetna proposed raising rates by an average of 2.8% (Colliver, San Francisco Chronicle, 1/28).

Delay Details

Jones asked the insurers to delay their premium increases so he would have sufficient time to review their rate filings and ensure that they comply with state law.
Both Aetna and Anthem proposed two rate hikes that would have taken effect on Jan. 1 and April 1. The health plans agreed to delay both rate hikes for 60 days past their original starting date.

PacifiCare also proposed a rate hike that was scheduled to take effect on Jan. 1, but said the increase now would be delayed until April 1.

No Delay for Blue Shield

Meanwhile, Blue Shield of California is moving forward with its plan to increase premiums by an average of 30% for nearly 200,000 individual policyholders. The insurer rejected Jones' request to delay a 6% premium increase scheduled for March 1, which would be Blue Shield's third rate hike since Oct. 1, 2010. Some Blue Shield policyholders could see their premiums climb by as much as 59% cumulatively after the three rate increases.
In a statement, Jones said, "Blue Shield 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" (Thompson, AP/Bloomberg, 1/27).

Blue Shield said it has hired an outside actuary to review its rate filings. The company also said it would issue refunds to policyholders if the actuary finds the rates to be unsound (Calvan, Sacramento Bee, 1/28).

Only 43% of small business owners are familiar with a tax credit that could help pay their health insurance costs for employees, according to a national survey released last week by the Small Business Majority (SBM).

"I'm not surprised," John Arensmeyer of the California chapter of the SBM said. "There has been a lot more heat than light shared on this law, so there's been a lot of confusion."

Arensmeyer has worked on a statewide "listening tour" for the past nine months, talking to small business owners about the creation of California's health benefit exchange and the potential savings from the tax credit.

"People don't really know for sure what's in the bill," Arensmeyer said. "Then when they see what's in it, they're pretty receptive to it."

According to a different SBM study released last month, a lot of California businesses could use the tax credit that allows businesses to declare a tax credit of up to 35% of their health insurance costs beginning last year (if they have fewer than 25 employees with average annual wages under $50,000).

"What we've found in California was that 80% of businesses are eligible for the credit," Arensmeyer said.

That's why Arensmeyer has been traveling the state, he said, to see what people's concerns are about the health reform law, and to make sure people understand what they might get out of it.

He said his organization is summarizing the results of the listening tour and will issue a report about it on Feb. 1. He also plans to do a survey specific to California right after that.

"We'll be in the field in February or March," he said, "and by early spring we'll have some results."

Small Businesses Eligible for Health Insurance Incentive
by David Gorn
CaliforniaHealthline

California's new Insurance Commissioner Dave Jones (D) is preparing to combat major rate hikes that have characterized the state's individual health insurance marketplace in recent years, the Wall Street Journal reports. Jones already has started putting pressure on several health insurance companies that recently announced rate increases for individual policies.

Recent Rate Hikes

On Jan. 6, Jones asked Blue Shield of California to delay a planned series of rate hikes that could total as high as 59% for individual policyholders. This week, the commissioner asked Aetna, Anthem Blue Cross and PacifiCare to postpone their planned rate increases so he could review the filings.

Jones said, "We have a long history in California of 10%, 20%, 30%, 40% rate hikes. This is just business as usual."

Major Issue in California

Rate increases in the individual health insurance market have been a major issue in California because the state has the largest number of individual policyholders. About two million Californians purchased individual health insurance policies in 2009, according to the Kaiser Family Foundation. Marian Mulkey -- director of health reform at the California HealthCare Foundation -- said premiums have been rising across California because the state's economic downturn has prompted many healthy residents to cancel their coverage, leaving insurers with a higher proportion of sick people in their coverage pools.

Authority Over Rate Hikes

California regulations require health plans to submit their rates to the insurance commissioner, who can review them to ensure they are in compliance with state law. The state does not allow the commissioner to reject premium increases. During his time in the state Assembly, Jones authored legislation that would have authorized the commissioner to reject rate hikes, but the measure failed to pass. Jones has said he intends to support similar legislation this year.

Meanwhile, the federal health reform law is expected to increase oversight of rate increases nationwide. Starting in July, the federal government will have the authority to review premium hikes exceeding 10% in states that do not have sufficient rate review procedures in place. Although federal officials will not be able to reject the premium increases, insurers will be required to justify their rates.

Bolstered by millions of dollars of aid from Washington, California managed to hold its healthcare safety nets together last year despite the fallout from the recession. Now, however, with emergency federal aid schedule to end this year, it is unclear how much longer California's financially strained government will be able to head off cutbacks. Driven by poverty and expanded eligibility, enrollment in Med-Cal. The Medi-Cal programs is jointly funded by federal and state governments using a complex formula that varies from state to state.

The Medi-Cal expansion - coupled with growth in the Healthy Families program for children in low to moderate-income families provided much-needed coverage and peace of mind to families while they looked for jobs and struggled to pay the bills. Without Medi-Cal and Healthy Families, the uninsured rate most certainly would have been higher.

Maintaining those two programs was possible in large part because of the special assistance that Congress has made available to California starting with the economic stimulus bill passed in early 2009. More recently (Nov 2 2010), California sought and won a Medicare waiver from the federal government. The plan, which the state calls a "bridge to reform," is also designed to bolster the state's safety-net hospitals, as well as lower overall health care costs. Under the agreement (a waiver of standard Medicaid rules aimed at allowing states to test innovative new programs) California promised to shave $2 billion per year from its existing Medi-Cal bill by streamlining care for its highest-cost recipients: seniors, adults with disabilities and children with severe illnesses. The federal government agreed to give California $2 billion per year in return.

The plan, which the state calls a "bridge to reform," is also designed to bolster the state's safety-net hospitals, as well as lower overall health care costs. Under the Nov. 2 agreement _ a waiver of standard Medicaid rules aimed at allowing states to test innovative new programs _ California promised to shave $2 billion per year from its existing Medicaid bill by streamlining care for its highest-cost recipients: seniors, adults with disabilities and children with severe illnesses. The federal government agreed to give California $2 billion per year in return.

The California safety net weathered the recession to date because the enhanced federal aid required the state not to narrow eligibility for Medi-Cal, even though it was allowed to pare back some benefits.

The Affordable Care Act (ACA) continues that requirement until 2014, but the extra money from Washington is set to run out in June. That is forcing California leaders to contemplate a new round of cuts. This week, newly elected Gov. Jerry Brown proposed $1.7 billion in cuts to the Medi-Cal program, including new limits on prescription drugs and doctor visits.