Connecticut Attorney General's Office

Press Release

Attorney General Seeks Reconsideration Of Insurance Rate Increases, Calls Review Flawed, Incomplete

October 5, 2010

            Rate increases -- some as high as 50 percent -- should be reconsidered by the Insurance Department now, before Connecticut consumers lose health coverage to premium costs they can no longer afford, Attorney General Richard Blumenthal said today.      

            “I am deeply disappointed about rate hikes of up to 50 percent that the insurance Department has approved for Aetna and Anthem,” Blumenthal wrote Insurance Commissioner Thomas R. Sullivan. “For financially hard-pressed Connecticut residents struggling to make ends meet, these rate hikes will mean the cost of some premiums will skyrocket so high that families will no longer be able to afford them. I urge you to reconsider these rate hikes approved without detailed scrutiny and careful consideration of all the factors necessary to determine whether a rate is ‘excessive.’”

            In reviewing rate requests, consumers expect the Insurance Department to consider medical trends since the last rate increase; insurer expenses and profits; administrative costs; and the impact on potential policyholders, Blumenthal said. The department failed to weigh those factors in approving recent Anthem and Aetna rate increases, he said.

            “Insurers asked the department to take their word for it -- without providing information vital to protect consumers and businesses,” Blumenthal said. “The rate requests were approved without vital information, leaving consumers and businesses with crushing price hikes.

            “I urge the department to reconsider these unjust and unjustifiable rate increases -- a slap in the face to struggling consumers and businesses. Aetna and Anthem must be held accountable. Profiteering at the expense of consumers must stop.”

            Blumenthal’s review of the Insurance Department’s approvals found:

·         Aetna provided little or no documentation or explanation for requested rate increases;

·         Anthem, which sought and received increases up to 50 percent, said the hikes were justified by “enterprise experience” and “Milliman continuance tables.” The company failed to provide the tables or any explanation of “enterprise experience”;

·         Aetna acknowledged its spending on medical care fell from 61 to 48 percent of premiums, far below the industry standard of 80 percent, a future requirement in the healthcare reform bill;

·         Anthem -- which reported a $4 billion profit last year -- refused to provide the percentage of premiums spent on medical care;

·         Anthem provided no documentation showing that policies in question were losing money or marginally profitable, necessitating premium increases;

·         Anthem and Aetna sought and the department awarded increases of 7 to 46 percent to meet new federal requirements that federal authorities and an independent insurance consulting firm say should only add 1 to 2 percent to premiums. Other Connecticut insurers requested 1 to 2 percent increases to provide the same services, as did insurers in other states.

Blumenthal said in his letter to Sullivan, “As a result of these shortcomings in the rate review, Connecticut’s policyholders deserve reconsideration of the approval of these rate increases.”