The Price of a Rejection

In the past election we heard repeatedly that Proposition 45 would be too costly for the system. A health industry alliance, under the misleading slogan “Against higher costs,” spent tens of millions of dollars and even bought a union’s silence, so California’s insurance commissioner won’t regulate rates even for a small percentage of insurers in individual plans.

All of us who supported the measure are not surprised now that an insurance company, Aetna, is imposing rate hikes averaging 10.7% for more than 64,000 individuals. According to the California Department of Insurance, this increase could reach 19.5% for small businesses renewing their insurance in the first quarter of 2015.

According to Commissioner Dave Jones, a 3.6% increase was planned in the summer. Then it went up to 10.7% in October, when it appeared that the initiative would be defeated, said the official.

In short, clearly nothing is going to stop this hike. In 35 states, the insurance commissioner has the power to reject a proposed rate hike. Because of the Proposition 45 fiasco, California is not one of them.

The initiative’s defeat was the insurer interests’ victory. Covered California opposed it arguing that it would harm the new system under Obamacare, even though it only affected 16% of those insured in California. Kaiser, for its part, bought the silence of the SEIU union with job promises, among other things.

Aetna insisted that the need of the hike had been studied meticulously. It’s ironic that their future projections are so high, when costs in the health industry have generally decreased.

In this case, the hike goes to a business sector that has to pay insurers $23.5 additional millions for the premium increase.

In fact, the health industry’s actions do not appear to be associated with costs as much as with the possibility of maximizing profits with no oversight. The Proposition 45 defeat gave them that option