LA Times
The scheduled March 1 hike of up to 39% for individual health insurance policies will not take effect before May 1. In the meantime, California regulators will analyze the legality of the increases.
Reporting from Sacramento - Anthem Blue Cross on Saturday announced it would delay until May 1 controversial price increases of up to 39% for its individual health insurance policyholders in California, but maintained its rates were fair, legal and necessary.
The announcement followed a barrage of criticism in recent weeks from policyholders, consumer advocates, regulators, state legislators, members of Congress and the Obama administration.
State Insurance Commissioner Steve Poizner said Saturday that he secured an agreement with Anthem to postpone for at least two months the increases that had been set to take effect March 1 for many of the estimated 800,000 policyholders.
The delay, he said, would give state regulators time to have newly hired outside health-insurance actuarial experts analyze Anthem's rates to make sure they don't violate California law.
"We have instructed the actuaries to review the rates with a fine-tooth comb to ensure they comply with state law that requires that 70 cents of every dollar in premiums is spent on medical benefits," Poizner said. "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."
In Washington, Secretary of Health and Human Services Kathleen Sebelius said the agreement "underscores the urgency of passing real health insurance reform." She has been critical of the insurer's explanations of the rate hikes.
"While a two-month delay offers some temporary relief," she said, "what California families need is long-term health insurance security, so that they don't face sharply higher prices or fewer benefits."
Anthem is the largest for-profit insurer in California, and it is a unit of insurance giant WellPoint Inc. of Indianapolis.
Headquartered in Woodland Hills, Anthem said it welcomed the state's review and was confident that regulators would find its rates to be justified. The company blamed the increases on rising medical costs and an exodus of health consumers from its ranks caused by job loss and consumer belt-tightening.
WellPoint executive Brian Sassi, who oversees the company's individual policies nationwide, defended the increases in a statement. "Anthem filed these rates with the appropriate regulators in November of 2009," he said. "They are actuarially sound and in full compliance with all requirements in the law.
"Our decision to agree to postpone the rate adjustments does not change the underlying issue," the statement continued. "All health plans are in the same situation, trying to deal with the steadily increasing medical costs in the delivery system, which are not sustainable."
The proposed rate hike should average about 25%, and less than a quarter of the company's policyholders should see increases of 35% to 39%, the company said. Some customers can expect rate reductions, it added.
As public criticism of the rates grew, so did action by government officials. Anthem faces three inquiries over its rates, which followed what policyholders say were large increases last year.
In addition to the inquiry by state insurance regulators, Congress has opened an investigation, and a panel of the House Committee on Energy and Commerce has scheduled a hearing Feb. 24. The California Assembly's health committee will conduct a hearing Feb. 23.
Poizner said Saturday that he was doubtful of Anthem's position. Those kinds of jumps appear to be out of line "in the middle of a deep recession when people are struggling," he said.
And he said he has a "healthy skepticism" about Anthem's assertion that it spends at least 70% of its revenues from sales of individual health insurance policies on medical care for its customers.
Poizner said he has the legal authority to suspend Anthem's license to sell insurance in California if he finds that the company has violated state law.
California consumer advocacy groups also welcomed the two-month delay, but said they feared that state law doesn't give the commissioner enough authority to approve or disapprove changes in health insurance rates.
That may be why Poizner's office said little publicly when it first reviewed Anthem's rate increase filing last fall, said Anthony Wright, executive director of Health Access California, a statewide consumer healthcare coalition in Sacramento.
"It basically got rubber-stamped a couple of months ago," Wright said. "But after the spotlight came on, there was a reason to look further into the reasons for the rate increase."
Jerry Flanagan, health policy director at Consumer Watchdog in Santa Monica, said Anthem's efforts may prompt a backlash. He urged the Legislature to give Poizner more power to review and possibly disapprove new rates. "Existing law is inadequate to restrain rate increases," he said.
State lawmakers, led by Assemblyman Dave Jones (D-Sacramento), are pursuing bills that make health insurance just as highly regulated in California as automobile insurance. Proposition 103, an initiative approved by voters in 1988, requires that automobile insurers get approval from the insurance commissioner before they can raise or lower rates.
Jones, who is chairman of the Assembly health committee, said Proposition 103-type regulation is the only way to keep consumer health costs in check. Although such legislation failed in 2007 and 2009, Jones predicted that the outcome could be different this year because "the public tolerance for these outrageous rate hikes has been exhausted."
The announcement followed a barrage of criticism in recent weeks from policyholders, consumer advocates, regulators, state legislators, members of Congress and the Obama administration.
State Insurance Commissioner Steve Poizner said Saturday that he secured an agreement with Anthem to postpone for at least two months the increases that had been set to take effect March 1 for many of the estimated 800,000 policyholders.
The delay, he said, would give state regulators time to have newly hired outside health-insurance actuarial experts analyze Anthem's rates to make sure they don't violate California law.
"We have instructed the actuaries to review the rates with a fine-tooth comb to ensure they comply with state law that requires that 70 cents of every dollar in premiums is spent on medical benefits," Poizner said. "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."
In Washington, Secretary of Health and Human Services Kathleen Sebelius said the agreement "underscores the urgency of passing real health insurance reform." She has been critical of the insurer's explanations of the rate hikes.
"While a two-month delay offers some temporary relief," she said, "what California families need is long-term health insurance security, so that they don't face sharply higher prices or fewer benefits."
Anthem is the largest for-profit insurer in California, and it is a unit of insurance giant WellPoint Inc. of Indianapolis.
Headquartered in Woodland Hills, Anthem said it welcomed the state's review and was confident that regulators would find its rates to be justified. The company blamed the increases on rising medical costs and an exodus of health consumers from its ranks caused by job loss and consumer belt-tightening.
WellPoint executive Brian Sassi, who oversees the company's individual policies nationwide, defended the increases in a statement. "Anthem filed these rates with the appropriate regulators in November of 2009," he said. "They are actuarially sound and in full compliance with all requirements in the law.
"Our decision to agree to postpone the rate adjustments does not change the underlying issue," the statement continued. "All health plans are in the same situation, trying to deal with the steadily increasing medical costs in the delivery system, which are not sustainable."
The proposed rate hike should average about 25%, and less than a quarter of the company's policyholders should see increases of 35% to 39%, the company said. Some customers can expect rate reductions, it added.
As public criticism of the rates grew, so did action by government officials. Anthem faces three inquiries over its rates, which followed what policyholders say were large increases last year.
In addition to the inquiry by state insurance regulators, Congress has opened an investigation, and a panel of the House Committee on Energy and Commerce has scheduled a hearing Feb. 24. The California Assembly's health committee will conduct a hearing Feb. 23.
Poizner said Saturday that he was doubtful of Anthem's position. Those kinds of jumps appear to be out of line "in the middle of a deep recession when people are struggling," he said.
And he said he has a "healthy skepticism" about Anthem's assertion that it spends at least 70% of its revenues from sales of individual health insurance policies on medical care for its customers.
Poizner said he has the legal authority to suspend Anthem's license to sell insurance in California if he finds that the company has violated state law.
California consumer advocacy groups also welcomed the two-month delay, but said they feared that state law doesn't give the commissioner enough authority to approve or disapprove changes in health insurance rates.
That may be why Poizner's office said little publicly when it first reviewed Anthem's rate increase filing last fall, said Anthony Wright, executive director of Health Access California, a statewide consumer healthcare coalition in Sacramento.
"It basically got rubber-stamped a couple of months ago," Wright said. "But after the spotlight came on, there was a reason to look further into the reasons for the rate increase."
Jerry Flanagan, health policy director at Consumer Watchdog in Santa Monica, said Anthem's efforts may prompt a backlash. He urged the Legislature to give Poizner more power to review and possibly disapprove new rates. "Existing law is inadequate to restrain rate increases," he said.
State lawmakers, led by Assemblyman Dave Jones (D-Sacramento), are pursuing bills that make health insurance just as highly regulated in California as automobile insurance. Proposition 103, an initiative approved by voters in 1988, requires that automobile insurers get approval from the insurance commissioner before they can raise or lower rates.
Jones, who is chairman of the Assembly health committee, said Proposition 103-type regulation is the only way to keep consumer health costs in check. Although such legislation failed in 2007 and 2009, Jones predicted that the outcome could be different this year because "the public tolerance for these outrageous rate hikes has been exhausted."
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