State Calls Anthem’s 5.2% Small Business Rate Hike ‘Excessive’

On Tuesday, California Insurance Commissioner Dave Jones (D) criticized Anthem Blue Cross for implementing a quarterly rate hike of 5.2% for small businesses, the Sacramento Bee reports.

California regulators can investigate rate hikes but do not have authority to reject the increases (Kasler, Sacramento Bee, 4/3).

Details of Rate Hike

Anthem’s rate increase took effect April 1.

According to Jones, Anthem's average 12-month premium increase for small businesses is 10.5%.

He said that the rate hike immediately will affect about 45,000 individuals at 7,000 small businesses and that it eventually could affect up to 250,000 individuals over the next year (Robertson, Sacramento Business Journal, 4/2).

Jones' Comments

At a news conference in Sacramento, Jones called the rate hike "excessive and unreasonable."

He said,"[I]t's simply galling that Anthem Blue Cross would impose another increase on small employers" in the current economy.

According to Jones, Anthem is increasing premiums despite earning a 25% return on equity in 2012.

Jones added that the insurer has exaggerated its inflation forecast by including health care costs that it will not need to pay until next year.

Anthem's Response

Darrel Ng -- an Anthem spokesperson -- said that the insurer's profit from small businesses plans was only 1% last year.

Anthem called the rate hike a matter of "economic reality faced throughout the entire industry" (Sacramento Bee, 4/3).

Jones Taps Consumer Group To Help Review Rate Hikes

In related news, Jones has awarded an $88,000 one-year contract to Consumer Watchdog to help the state Department of Insurance review health insurers' rate hikes.

Insurance industry officials criticized the state's decision to hire a group that has been a long-time critic of the health insurance industry to review premium increases.