San Francisco Chronicle: Kaiser raising rates for 300,000 subscribers

NewsJune 29, 2011

San Francisco Chronicle:

By Victoria Colliver

Tuesday, June 28, 2011

Kaiser Permanente plans to raise rates more than 10 percent starting Friday for about 300,000 Californians enrolled in plans offered through small businesses.

Kaiser officials said the increases average 10.7 percent, although a consumer group and a labor organization said the hikes exceed 17 percent for some subscribers.

The National Union of Healthcare Workers, which is in contract negotiations with the health maintenance organization giant, sent a letter Friday to Gov. Jerry Brown requesting the HMO regulator – the state Department of Managed Health Care – investigate the proposed increases.

Officials from the Department of Managed Health Care could not be reached for comment.

While Kaiser’s proposed hikes are significantly smaller than cumulative rate increases in excess of 50 percent that other insurers tried to impose on individual consumers, the union said the increases are significant because of the Oakland nonprofit HMO’s strong financial performance.

“What is their justification for causing economic hardship on 300,000 people?” asked union spokesman Leighton Akio Woodhouse. “They’re doing incredibly well financially (and) sitting on huge reserves.”

Kaiser reported first-quarter 2011 profit of $921 million, and the union said the HMO’s reserves exceeded $12 billion.

“We submitted rates to DHMC according to its requirements at the end of April,” the company stated in response to the union’s letter to the governor. “The average rate is 10.7 percent.”