Anthem rate hike decried by regulator
A California regulator says the increase imposed on 170,000 customers is excessive.
California insurance chief Dave Jones, above, criticized the healthcare giant for imposing an “excessive” rate increase on 170,000 of its customers.
California’s insurance commissioner criticized healthcare giant Anthem Blue Cross for imposing an “excessive” rate increase on nearly 170,000 of its customers statewide.
Dave Jones said Wednesday that Anthem had failed to justify its 9% average rate hike that took effect April 1. Premiums are going up as much as 25% for about 4,000 policyholders.
“These rate hikes have real financial impact on Californians,” Jones said. “It means less money for other essentials like food, clothing, housing and education.”
But state officials have no power to stop health insurance rate increases that are deemed unreasonable. Jones lost his bid to change that last fall when Californians rejected the Proposition 45 rate-regulation measure.
Anthem defended its rates and said the increase “reflects the fact that escalating healthcare costs are an economic reality faced by the entire industry.”
In state filings, Anthem said its medical costs for this group of customers were expected to rise 9.5% this year. The company attributed a big share of that to rising prices for many prescription drugs.
“More high-cost, massmarket specialty drugs are expected to be released in the next year, further increasing medical costs and contributing to higher premiums,” Anthem spokesman Darrel Ng said.
Jones said Anthem was overstating its past and future medical expenses.
In the Anthem case, these are “grandfathered” policies purchased before the 2010 federal health law was enacted. They don’t comply fully with the Affordable Care Act, but consumers can hold on to them as long as they don’t make major changes in deductibles or other benefits.
Jones said Anthem’s practice of imposing hefty increases year after year suggests that the company wants to push these customers into newer policies “with narrower networks and potentially less access to medical providers.”
The insurer attributed the rising premiums to an aging customer pool “because new younger, healthier members are not able to sign up for grandfathered plans.”
Jones said his department’s actuaries determined that a 1.5% increase was justified in this case, but the company disagreed. The regulator said customers would have saved $33.6 million with the lower increase.