Insurance companies, bless their hearts, seem determined to remind us why we need the Affordable Care Act. The latest example comes from Anthem Blue Cross, which has just hit 306,000 customers in California with premium increases of up to 25%.
As reported by my colleague Chad Terhune, the increases average 16% and are scheduled to kick in April 1, unless the state Department of Insurance jawbones Anthem into backing down.
Here's the kicker: No one can blame these increases on the mandates of the Affordable Care Act, a popular argument among critics of the act. That's because the increases are for grandfathered policies exempt from the act.
"It's a rich irony," says Anthony Wright, executive director of Health Access, a leading California consumer advocacy group. "The insurers can't have it both ways -- they can't blame the increases on the ACA while increasing rates on their non-ACA-compliant plans as well."
Wright observes that many of Anthem's grandfathered plans don't even include maternity care, the mandate for which is a popular target of the anti-Obamacare crowd. (To learn why, yes, men should pay for maternity care, see our explanation here.)
California started requiring that all new plans sold in the state include maternity coverage in mid-2012. But the plans grandfathered in under the Affordable Care Act had to exist prior to March 23, 2010, and have been substantially changed since then. Wright says Anthem was always among the most aggressive marketers of plans without maternity provisions.
Anthem's move is a reminder that the claims of sharp premium increases for consumers forced to move to exchange-based insurance after their old plans were canceled had a built-in exaggeration -- in comparing the old 2013 premiums with the 2014 exchange premiums, the assumption was made that the old premiums wouldn't rise. But they were already rising almost every year. The policy of one couple Terhune cited had increased 53% since 2010 -- not counting the new hike of 25%.
Anthem's rate filing, which the state insurance commissioner can examine but not overturn, already has come under fire from the California Public Interest Research Group. CALPIRG says it goes well beyond any reasonable estimate of medical inflation and isn't backed up with data of "sufficient clarity and detail" to prove it's justified.
The increases are reminiscent of the massive hike of up to 39% Anthem proposed in 2010, just as the debate on the Affordable Care was about to begin in Congress. That increase, which the company later rolled back, helped jump-start the discussion.
Luckily, Anthem customers have a choice this time around. They can check the state's insurance exchange at coveredca.com to see if they can replace their old plan with a new one that might well be better, at lower cost.
Wright says his group and CALPIRG found that about half of Anthem's grandfathered plans might be only marginally out of compliance with ACA minimum requirements, but others have bigger coverage gaps that reduce them to what consumer advocates consider "junk insurance." In any case, the ACA forbids insurers to refuse coverage to people with preexisting medical conditions or charge them higher premiums. Those protections didn't exist in 2010.
As for where the money from Anthem's fattened premiums might go, one destination may well be the campaign against a November ballot proposition that would give the insurance commissioner the power to reject health insurance rate hikes. Anthem and its parent company, WellPoint, already have pumped nearly $12.8 million into the effort. Other health insurers have contributed more than $650,000.
Hold on to your hats: this campaign will absorb millions more. Insurance customers should keep that in mind as the premium bills roll in.