Anthem Blue Cross Scales Back Rate Hike, Policyholders Still Face Average 9.1% Increase in July

Mar 21, 2011, 15:51 ET from Consumer Watchdog

Without Rate Regulation, Consumers Left in Hands of Corporate Executives

SANTA MONICA, Calif., March 21, 2011 /PRNewswire-USNewswire/ -- Executives with Anthem Blue Cross have announced that the 16.4% rate hike previously scheduled to hit 600,000 Californians on June 1, 2011 will be reduced to an average 9.1% rate hike taking effect, instead, on July 1. Last week, Blue Shield of California rescinded a proposed 6.5% rate hike that, in conjunction with previously imposed 2010 hikes, would have resulted in some customers facing increases of 86.5% in less than a year. The reductions are clearly an attempt to quell political and public protest and avoid effective state regulation of premiums, said Consumer Watchdog.

Anthem gained notoriety last year for trying to impose a 39% increase only to be exposed for incorporating bad arithmetic into its rate filing. In October, many of its customers faced a 20% rate hike instead. The 16.4% increase Anthem announced at the beginning of this year, now reduced to 9.1%, comes on the heels of an annual profit of $2.9 billion for the insurer's parent company Wellpoint, Inc.

"If you buy health insurance in California, your only hope right now is that publicity and politics might convince some executives to scale back the rate increases, at least for a few months," said Heller. "Even with all the attention on these overwhelming rate hikes, Anthem customers are still facing an approximately 30% premium hike in less than a year. That is unsustainable and unacceptable."

Under current California law, the insurance commissioner is not authorized to block excessive rate hikes from taking effect. Both Anthem Blue Cross and Blue Shield, along with other insurers, have aggressively opposed efforts in California to regulate health insurance rates. This year, a bill – AB 52 (Feuer – Los Angeles) – has been introduced that would give the insurance commissioner power to reject excessive health insurance premium hikes. Insurers are likely hoping that their sudden decisions to reduce rate hikes will defuse the mounting pressure for real rate regulation in California

The proposed reform legislation, AB 52, would require insurance companies to get permission before implementing any hike and would allow the insurance commissioner to deny or modify rate changes determined to be excessive. The bill would enact rules similar to Proposition 103, which requires the Insurance Commissioner to regulate auto insurance rates. Under those rules California motorists have saved more than $62 billion on their auto coverage over the past two decades, according to a 2008 report by the Consumer Federation of America.

"Insurance companies with huge profits aren't nice guys just because they gouge us a little less," said Doug Heller, Executive Director of Consumer Watchdog. "Until the insurance commissioner has the ability to block excessive and unnecessary rate hikes, Californians are going to face rate hikes like this year after year."

Consumer Watchdog is a nonprofit, nonpartisan organization with offices in California and Washington, D.C. http://www.ConsumerWatchdog.org

SOURCE Consumer Watchdog



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