Jones Wants Anthem Excluded From Small Business Exchange

On Thursday, California Department of Insurance Commissioner Dave Jones (D) released a statement recommending that Anthem Blue Cross be excluded from the state's health insurance exchange for small businesses because of its recent rate hikes, the Los Angeles Times reports.

Under California law, the insurance commissioner can investigate rate increases and deem them unreasonable, but regulators do not have the authority to reject the rate hikes (Terhune, Los Angeles Times, 6/13).

Background on Exchange

The exchange -- named Covered California -- primarily will serve individuals and small businesses.

The exchange is expected to open for registration in October, and an estimated five million people will purchase plans through the exchange in 2014 (California Healthline, 6/13).

The state estimates that up to 200,000 small business workers and their dependents will get coverage through the exchange's market for employers with 50 or fewer workers (Los Angeles Times, 6/13).

About Anthem's Rate Hikes

Anthem has imposed three rate hikes for small businesses over a period of seven months, including a:

• 10.6% rate hike announced in January;
• 10.5% rate hike announced in March; and
• 7.6% rate hike scheduled to take place July 1 (Robertson [1], Sacramento Business Journal, 6/13).

Jones' Comments

Jones said that he singled out Anthem because it is the only insurer that has had three consecutive premium increases that were deemed unreasonable (Los Angeles Times, 6/13).

He said, "It's frustrating for me as the insurance commissioner, it's frustrating for small businesses in California and it's frustrating for individuals and families who are paying time and time again increases that are simply unsustainable" (Goldberg, KPBS, 6/13).

Jones said that barring Anthem from the exchange would offer a new way to hold the insurer accountable for its rates.

Response From Anthem

Anthem has maintained that its rate hikes reflect the "economic reality" of rising health care costs. The insurer has said that its exclusion from the exchange would hamper competition (Los Angeles Times, 6/13).

Response From Covered California

Larry Hicks -- a spokesperson for Covered California -- said, "We will consider the commissioner's input as part of our review process." However, he added that "any decision we make will be based on what's best for consumers."

Observers Weigh In

Patrick Johnston -- president and CEO of the California Association of Health Plans -- said, "There is no good reason to suppress competition and limit consumer choice when the exchange promises to offer a wide selection of health plans from which small businesses can choose" (Sacramento Business Journal, 6/13).

Micah Weinberg -- a senior policy adviser at the Bay Area Council -- said that excluding Anthem would "make health reform for the small business market less attractive."

Gerald Kominski -- director of the UCLA Center for Health Policy Research -- welcomed Jones' move, saying, "I think sitting somebody in the penalty box is a pretty strong signal that you cannot continue to abuse the market" (Los Angeles Times, 6/13).

Exchange Delays Small Business Announcement

Meanwhile, Covered California has postponed when it plans to announce which insurers will be offering policies in the small business exchange.

The exchange initially planned to make the announcement in early June, but Sarah Moussa -- a Covered California spokesperson -- said the announcement is expected in the next month (Robertson [2], Sacramento Business Journal, 6/13).

Broadcast Coverage

On Thursday, Capital Public Radio's "KXJZ News" reported on Jones' request to Bar Anthem from the small business exchange (Bartolone, "KXJZ News," Capital Public Radio, 6/13).