Jones Calls Anthem's Rate Hike 'Unjustified and Unreasonable'
On Wednesday, California Insurance Commissioner Dave Jones (D)criticized Anthem Blue Cross of California's nearly 9% average rate hike as "unjustified and unreasonable," Modern Healthcare reports.
Details of Rate Hikes
Starting April 1, Anthem imposed an average rate increase of 8.7%, affecting about 170,000 members (Modern Healthcare, 4/22). Meanwhile, about 4,000 policyholders saw increases of up to 25% (Terhune, Los Angeles Times, 4/22).
According to Modern Healthcare, the rate increases apply only to grandfathered health plans -- those that were purchased prior to the Affordable Care Act going into effect and therefore do not need to comply with its coverage requirements (Modern Healthcare, 4/22).
Jones' Criticism
Jones said that Anthem had failed to justify its most recent rate hike, alleging that the insurer had exaggerated its past and future expenses.
The state Department of Insurance's actuaries determined that a 1.5% increase was justified. Jones said the lower rate hike would have saved customers about $33.6 million. He added that Anthem in the last two years has increased rates by 26.5% on average for grandfathered plans without changing benefits
Anthem Response
Anthem defended its rate increase, noting that it "reflects the fact that escalating health care costs are an economic reality faced by the entire industry."
In filings, Anthem reported that its medical costs for policyholders with grandfathered plans were projected to rise by 9.5% in 2015, in large part because of higher costs for prescription drugs.
Anthem spokesperson Darrel Ng said, "More high-cost, mass-market specialty drugs are expected to be released in the next year, further increasing medical costs and contributing to higher premiums."
Anthem added that the rate increases could be attributed to aging consumers "because new younger, healthier members are not able to sign up for grandfathered plans" (Los Angeles Times, 4/22).
The insurer added, "Even with the rate change, in many cases, these policies have a lower monthly premium than those sold on the individual market today" (Russell, San Fernando Valley Business Journal, 4/22).
Comments from Readers
Peter Lee and the Covered CA Board of Directors are silently and gleefully cheer leading these increases. These increases are going to eventually increase the Covered CA enrollment numbers, which is all Peter and the lame BOD seem to care about. Low on their priority list are fixing the narrow networks and the lousy and costly ACA health plans. Peter Lee and the CCA BOD need to be replaced with members/leaders that will champion the consumer.
Now the fun begins. There will be a large movement of the grandfathered people to the ACA within Anthem. As this becomes a reality, the new ACA policyholders will have a wakeup call that their providers that serviced the grandfathered plan will not accept their new ACA plan. Always check ahead to see if Providers will accept before changing plans!
Proving, yet again, 1) what damn fools the voters are and 2) that Big Medicine is public enemy #1 in the decline of the middle class. And where is Covered California cowering, pretending to stick up for the public interest?
Good comments Scott!
Grandfathered plans currently offer a great deal in comparison to current small group and individual non-grandfathered plans. It is inevitable that grandfathered plans will eventually lose their luster. These old grandfathered plans had lower rates because those participating in them were made up of a risk pool of healthly people, with a continual in-flow of more healthy people. Those two reasons are now gone. The grandfathered pool of business will slowly deteriorate. This is just the beginning.
April 23, 2015 at 9:28 AM
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