June 25, 2010

Aetna Inc. (NYSE: AET) has withdrawn a filing it made to the California Department of Insurance proposing an average 19 percent rate increase for 65,000 individual policy holders, the Department reported.

Aetna attributed it to an error in the calculations.

“Aetna conducted a third round of internal actuarial reviews on our individual rate filings in California and found a miscalculation not previously detected. This was a simple human error,” the company reported in a prepared statement. “As soon as we uncovered this mistake, we informed the California Department of Insurance.”

This withdrawal comes after Insurance Commissioner Steve Poizner’s announcement last week that in addition to the Department of Insurance’s review of rate filings by the four largest health insurers in California, the agency will require an additional actuarial review by an independent company. Now Poizner has said the Department will also post insurers’ filings on the Department’s Web site.

“First, we found major problems with the Anthem Blue Cross rate filing, now additional scrutiny has revealed that Aetna’s filing has significant mathematical errors. Given that two of the four major health insurers have provided rate filings containing math errors, I believe an additional level of transparency is warranted,” Poizner stated in a press release. “I’m hopeful this public disclosure will add additional pressure on insurers to avoid errors,” he said.

The Department of Insurance has hired Axene Health Partners LLC, based in Winchester, CA to conduct reviews of rate filings by Aetna of Hartford, CT; Blue Shield of California in San Francisco; Anthem Blue Cross of Oxnard, CA, a subsidiary of WellPoint Inc. and Health Net Inc. of Woodland Hills. These four control about 90 percent of the market for individual health insurance in the state.

Axeme is the company that found many errors in the Anthem Blue Cross rate filing earlier this year which resulted in Anthem withdrawing that filing.

Aetna said it is continuing to work with the Department of Insurance and Axene on the filing review.

In California health insurance companies are not required to get state approval of rate changes, but they do need to spend 70 cents of each dollar they collect in premiums on medical benefits.