Jones Calls Anthem’s Rate Hike ‘Unjustified and Unreasonable’
In California, the insurance commissioner does not have authority to reject health insurance rate hikes after residents last November voted against Proposition 45 (Herman, Modern Healthcare, 4/22).
The rejection of Prop. 45 came after its opponents -- including insurers, such as Kaiser Permanente and the Blue Cross Blue Shield Association -- raised millions of dollars for a campaign against the measure (California Healthline, 11/4/14).
Details of Rate Hikes
Starting April 1, Anthem imposed an average rate increase of 8.7%, affecting about 170,000 members (Modern Healthcare, 4/22). Meanwhile, about 4,000 policyholders saw increases of up to 25% (Terhune, Los Angeles Times, 4/22).
According to Modern Healthcare, the rate increases apply only to grandfathered health plans -- those that were purchased prior to the Affordable Care Act going into effect and therefore do not need to comply with its coverage requirements (Modern Healthcare, 4/22).
Jones said that Anthem had failed to justify its most recent rate hike, alleging that the insurer had exaggerated its past and future expenses.
The state Department of Insurance's actuaries determined that a 1.5% increase was justified. Jones said the lower rate hike would have saved customers about $33.6 million.
Jones said, "These rate hikes have real financial impact on Californians," adding, "It means less money for other essentials like food, clothing, housing and education" (Los Angeles Times, 4/22).
He added that Anthem in the last two years has increased rates by 26.5% on average for grandfathered plans without changing benefits (Shinkman, Payers & Providers, 4/23).
Jones called the insurer's practice of high rate hikes an attempt to force consumers into newer health plans "with narrower networks and potentially less access to medical providers."
Anthem defended its rate increase, noting that it "reflects the fact that escalating health care costs are an economic reality faced by the entire industry."
In filings, Anthem reported that its medical costs for policyholders with grandfathered plans were projected to rise by 9.5% in 2015, in large part because of higher costs for prescription drugs.
Anthem spokesperson Darrel Ng said, "More high-cost, mass-market specialty drugs are expected to be released in the next year, further increasing medical costs and contributing to higher premiums."
Anthem added that the rate increases could be attributed to aging consumers "because new younger, healthier members are not able to sign up for grandfathered plans" (Los Angeles Times, 4/22).
The insurer added, "Even with the rate change, in many cases, these policies have a lower monthly premium than those sold on the individual market today" (Russell, San Fernando Valley Business Journal, 4/22).
Consumer Watchdog Reaction
In a release, Consumer Watchdog President Jamie Court said, "These health insurance rip-offs will continue until the Department of Insurance is able to regulate health insurance rates the way auto and home insurance rates are" (Consumer Watchdog release, 4/22).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.