Aetna misrepresented how it spent some premiums, senator says

Washington -- An investigation into how insurance companies spend the money they receive from premiums each year has resulted in Aetna making a nearly $5 billion amendment to its 2008 health insurance regulatory filings, Sen. Jay Rockefeller (D, W.Va.), chair of the Senate Commerce Committee, announced Dec. 8.

Rockefeller said his committee began investigating four months ago how private health insurance companies spend the billions of dollars in premiums each year from individuals and small businesses. On Aug. 21, the senator wrote letters to Aetna and several other large health insurers requesting information on their medical-loss ratios, which is the percentage of each premium dollar that insurers use to pay their policyholders' claims versus other expenses, such as salaries and profits.

On Dec. 2, Aetna informed the committee that its largest subsidiary initially reported $6.6 billion in small-group premiums. The amended filing reclassifies $4.9 billion of those premiums as large-group premiums.

"Health insurance companies have a duty to provide accurate financial information both to consumers and to their regulators about how much money they actually spend on health care and how much they spend on profits, on executive salaries, and on figuring out how to deny care to people when they really need it," Rockefeller said. "Unfortunately, it looks like Aetna and other health insurers haven't been taking this duty very seriously."

Aetna said it reached out to Rockefeller to inform him of two classification errors it found in reports filed with the National Assn. of Insurance Commissioners, and that these mistakes resulted in the medical-loss ratio miscalculations.

"We have alerted our staff to the errors with an emphasis on quality control to prevent this from happening again," said Cynthia Michener, an Aetna spokeswoman.

On Nov. 2, Rockefeller sent a letter to Cigna accusing the insurer of failing to account accurately for as much as $5 billion in health insurance it sold in the commercial group market in 2008. Cigna's filings incorrectly reported that it did not conduct business in the small-group market, but the insurer has since informed the committee that it will amend that statement in its 2009 filing, Rockefeller said.

Cigna replied that it has only ever had a minor presence in the small-group market, with small groups accounting for only about a half-percent of its employer membership. "Because of our very limited small-group business, we have not separately reported the small-group data in our statutory financial statements filed with state regulators," said Christopher Curran, a Cigna spokesman.

In addition, the Connecticut Insurance Dept. "believes that we made no material misstatement in reporting our data and, moving forward, we have agreed to file our 2009 year-end by specified categories," Curran said.