Anthem Blue Cross Agrees To Delay Hike on Individual Rates

On Saturday, Anthem Blue Cross of California announced that it would delay planned rate increases for individual health insurance policies from March 1 until May 1, fulfilling a request by California Insurance Commissioner Steve Poizner (R) for enough time to investigate the increases, the New York Times reports (Sack, New York Times, 2/14).

Anthem recently informed many of its approximately 800,000 beneficiaries that premiums would increase by as much as 39% starting on March 1. The insurer also informed policyholders that it might start adjusting premiums more often than once a year (California Healthline, 2/12).

Poizner said his department needs to determine whether the increases would violate state regulations that require insurers to spend at least 70% of premiums on health claims, rather than on overhead costs or profit.

Poizner said, "There are reasons to be suspicious that this rate increase might not be in compliance," adding that the increases would be two to three times higher than the rate of medical inflation.

Poizner said that he has hired outside actuaries to review Anthem's proposed rate increases (Sack, New York Times, 2/14).

Poizner said he "will immediately take action to get Anthem Blue Cross to follow the law and lower their rates" if the actuaries find that the increases are not warranted (Lifsher, Los Angeles Times, 2/14). If Anthem is in violation of the state regulations, Poizner said he would revoke the company's license to sell insurance in the state unless it reduced its rates (New York Times, 2/14).

Anthem officials said that the increases are legal, necessary and fair (Los Angeles Times, 2/14).

Sebelius Keeps Up Criticism

In a conference call Friday, HHS Secretary Kathleen Sebelius said that she has a "degree of skepticism" about Anthem's proposed premium increases when its parent company WellPoint reported a $2.7 billion profit in the fourth quarter of 2009 and pays its top executives about $10 million.

Sebelius said that Anthem called for the increases "so it can keep its profit margins going," adding that she has a "number of underlying questions about what is going on."