Health Inc.

Anthem Holds Off On California Rate Hike

The brouhaha in California over Anthem Blue Cross' plan to hike rates on individual policies as much as 39 percent next month entered a new chapter over the weekend with the insurer agreeing to hold off on the increase until May.

California Insurance Commissioner Steve Poizner said the company had complied with his request to wait until independent actuaries can look over Anthem's books to determine whether it is, in fact, spending at least 70 percent of premiums on medical care, as required by state law.

At first glance, that 70 percent figure seems like a fairly low bar. But Dave Jones, a California assemblyman running for insurance commissioner, writes in Tuesday's San Francisco Chronicle that companies routinely game medical loss ratios, the benchmark for how much of premiums go to medicare care and how much to other expenses.

Jones argues a new law is needed to require state review in advance of proposed rate increases on health coverage, including hikes in co-payments and deductibles. Similar rate regulation is already in effect in California for auto and property insurance.

Poizner said annual inflation expected for medical costs in California is about 10 to 15 percent, the Associated Press reported, so he has "a healthy skepticism" about how the company can legally justify a 39 percent premium hike.

Anthem and its parent WellPoint have been prominent in the administration's drive to reinvigorate health overhaul.

Brian Sassi, president of Anthem Blue Cross of California, said the planned increases "are actuarially sound and in full compliance with all requirements in the law," according to the AP.

The New York Times dug into the controversy in Tuesday's paper. For their parts, Anthem and WellPoint have said they support overhaul as a remedy for a sick insurance situation, the Times reported.

The individual market for insurance, they says, is in a "recessionary death spiral" as healthy but financially strapped people skip insurance leaving a higher proportion of sick and expensive-to-insure people on company rolls. The companies raise rates, driving more people out of the market, and the problem just gets worse.

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