Under pressure from state and federal officials, Anthem Blue Cross on Saturday agreed to postpone a proposed rate increase in California for at least two months, while the state insurance department examines the legality of the proposal.
Anthem will delay the rate increase, which was expected to begin March 1 and will mean a 39% hike for some individual insurance members, until at least May 1, according to Insurance Commissioner Steve Poizner of California.
Poizner said state officials will review with a "fine toothed-comb" the proposed rate hike for an estimated 800,000 members to ensure that most of the planned increase is allotted toward medical expenses as required by law. Anthem officials said they agreed to the request for a delay to "allow the department additional time for review." Anthem officials stated they welcome the "regulatory review and are confident that our rates reflected anticipated medical costs."
"Our decision to agree to postpone the rate adjustment does not change the underlying issue. All health plans are in the same situation in trying to deal with the steadily increasing medical costs in the delivery system, which are not sustainable," Anthem officials said in a statement. "We are also experiencing a higher proportion of healthy individuals choosing not to enroll, leaving an insured pool that utilizes significantly more services. We need to refocus the healthcare reform debate toward steps that will improve quality and control the underlying medical costs, which is driving the high cost of coverage."
Anthem officials said they understand the impact any rate adjustment would have on their members, and their members' ability to continue to carry health insurance. The company officials said they are "committed to driving quality and reducing costs in the healthcare system and improving the lives of Californians we serve and the health of communities across the state."
The estimated rate hikes range from an average of 25% to 39%, according to news reports.
Poizner has stated that officials have "instructed the actuaries to review the rates with a fine-toothed comb to ensure they comply with state law that requires that 70 cents of every dollar in premiums is spent on medical benefits."
"Should they find that these rate increases were unwarranted, I will immediately take action to get Anthem Blue Cross to follow the law and lower their rates."
Anthem's proposed rate hike has come under criticism by the Obama Administration, with HHS Secretary Kathleen Sebelius accusing the company of leaving its customers with potentially "bad options: pay more for coverage, cut back on benefits or join the ranks of the uninsured. " Sebelius said she could not understand why the company would need a "massive increase" after its parent company, WellPoint, made $27 billion in the last quarter of 2009.
Anthem's proposed premium increases have also prompted an inquiry on Capitol Hill. The House Committee on Energy and Commerce and its subcommittee on oversight and investigations said they would examine the proposed rate hike increases affecting California's largest for-profit insurer. The subcommittee has scheduled a Feb. 24 hearing in Washington about the proposed increases. Angela Braly, the president and CEO of WellPoint Inc., the parent company of Anthem—was called to testify.
In California, state Assemblyman Dave Jones, D-Sacramento, chairman of the Assembly's Health Committee, announced plans to hold a Feb. 23 hearing on the topic.
Joe Cantlupe is a senior editor with HealthLeaders Media Online.
