Anthem Blue Cross Agrees to Delay Rate Increase

Anthem Blue Cross has agreed to a Feb. 8 request by California Insurance Commissioner Steve Poizner to delay its individual health insurance rate increase until May 1 to allow an independent actuary to review their rates, the California Department of Insurance has reported.

In November 2009, the insurer submitted to the California Department of Insurance a proposed rate increase of as much as 39 percent for individual health insurance. Anthem wanted to implement the increases on March 1 and blamed the weak economy and rising health care costs for its rate hike. However, the Commissioner asked the company to delay its rate increase to allow for an actuary to review the rates, all while Anthem also faced public scrutiny for its decision to raise rates.

Brian A. Sassi, president and CEO of the company’s Consumer Business Unit, noted that Anthem’s rate filing is actuarially sound and in full compliance with all requirements in the law.

“Our decision to agree to postpone the rate adjustment does not change the underlying issue,” Sassi said. “All health plans are in the same situation in trying to deal with the steadily increasing medical costs in the delivery system, which are not sustainable. We are also experiencing a higher proportion of healthy individuals choosing not to enroll, leaving an insured pool that utilizes significantly more services. We need to refocus the health care reform debate toward steps that will improve quality and control the underlying medical costs, which is driving the high cost of coverage.”

Nevertheless, he said his company will delay implementing the rate increase for all Anthem individual members regulated at either the state Department of Insurance or the Department of Managed Health Care.

“We welcome the regulatory review and are confident that our rates reflect anticipated medical costs,” Sassi said. “We understand the impact any rate adjustment has on our members and their ability to continue to carry health insurance. And we are committed to driving quality and reducing costs in the health care system and improving the lives of the Californians we serve and the health of communities all across the state. Members will be receiving a letter shortly that describes these changes in detail and whom to contact for additional information.”

CDI has retained David Axene and John Fritz of the actuarial firm Axene Health Partners LLC in Southern California to provide the independent analysis. The review is expected to be completed by mid-April.

“We have instructed the actuaries to review the rates with a fine tooth comb to ensure they comply with state law that requires that 70 cents of every dollar in premiums is spent on medical benefits. Should they find that these rate increases were unwarranted, I will immediately take action to get Anthem Blue Cross to follow the law and lower their rates,” Poizner said.

Sources: Anthem Blue Cross of California, CDI

Topics California Trends Pricing Trends