In Aetna’s recent rate filing, the insurer said its plan met the 70% minimum. But once the errors were identified, medical-claim spending fell below the 70% requirement. The proposed rates were higher than they should have been, officials said. Aetna notified regulators of its mistakes this week, about the same time the state’s consultant reported the problems.
“There were multiple errors … in the way [Aetna] annualized premiums and in the compounding of the rate increase,” said state Insurance Department spokesman Darrel Ng.
And just a sad coincidence, I’m sure, that these errors, and Wellpoint’s, both indicated a higher rate.
Seriously, this is bad news for the actuarial profession. It is our job to properly estimate rates. I know the calculations can be intricate, but that’s why we make good money.
And from a public policy perspective, health care costs will only come under control if everybody in the system screws their bolts down tight. That of course includes actuaries.