State Officials Approve Insurer Proposals To Increase Premiums
On Wednesday, California health insurance regulators announced that they approved a proposal by Anthem Blue Cross, the state's largest for-profit insurer, to raise premium rates for individual policyholders by 14% on average, the Los Angeles Times reports.
The new rates, which include an increase of as much as 20% for some individuals, are scheduled to take effect on Oct. 1. An estimated 800,000 state residents will be affected by the increase (Helfand, Los Angeles Times, 8/26).
Larger Rate Hikes Denied
Earlier this year, Anthem -- a subsidiary of WellPoint -- drew criticism from state and federal officials for requesting premium increases of as much as 39%, with average increases of about 25%Â (Tayefe Mohajer, AP/San Francisco Chronicle, 8/25).
In April, WellPoint officials announced that Anthem had withdrawn its request.
At the same time, California Insurance Commissioner Steve Poizner (R) released a summary of an investigation report by external actuaries who found "multiple, significant errors" with Anthem's proposal, including its calculations of medical claims trends.
Poizner said those errors "would have led to massive and unjustified rate increases." Anthem was notified about the errors and admitted to the mistakes (California Healthline, 4/30).
Meeting State's MLR Requirements
In June, Poizner ordered independent reviews of Anthem, Blue Shield and other state insurers to ensure that they were in compliance with state law that requires the companies to spend at least 70% of their premiums on medical care (AP/San Francisco Chronicle, 8/25).
Officials said that Anthem's rate filings showed that they were in compliance with the state's medical-loss ratio requirements, clearing the way for the rate increases (Sacramento Bee, 8/26).
A state Insurance Department spokesperson said that Anthem's smaller rate increase would save consumers $184 million (AP/San Francisco Chronicle, 8/25). Anthem, however, estimated that figure at about $150 million.
A WellPoint spokesperson said that policyholders would be notified of the rate increases in the coming days (Los Angeles Times, 8/26). All providers are required to give their policyholders 30 days notice before implementing rate increases (AP/San Francisco Chronicle, 8/25).
Blue Shield RateÂ Increases
Also on Wednesday, California regulators said they approved a request by Blue Shield of California to raise its premium rates by an average of 18.2% for 247,000 individual policyholders, the Sacramento Bee reports.
A Blue Shield spokesperson said that some of its customers, depending on age, could see a rise of more than 50% (Calvan, Sacramento Bee, 8/26).
Legislation To Strengthen State Oversight Under Consideration
State lawmakers now are considering legislation that would require insurers to first obtain the Insurance Department's approval before implementing premium rate increases (Los Angeles Times, 8/26).
Wright said, "The fact that Anthem had to pull back and reduce their rate hike shows that public oversight can work, but we're not going to have the presidential spotlight on every future rate increase" (AP/San Francisco Chronicle, 8/25).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.