Thousands of Anthem Blue Cross customers await decision on rate hikes
Thousands of worried Californians who buy individual insurance policies from Anthem Blue Cross will soon learn whether they face rate increases of up to 39% that were put on hold for two months amid a public outcry that helped revive national healthcare legislation.
California’s largest for-profit health insurer agreed to postpone the increases for many of its 800,000 individual policyholders until May 1 while an outside actuary, appointed by state Insurance Commissioner Steve Poizner, evaluated its spending practices.
The actuary report from Axene Health Partners is expected within two weeks.
Poizner said in February that he would stop Anthem’s rate hikes if the report shows that the Woodland Hills insurer spends less than 70% of its premium revenue on medical claims, as required by state law.
At the time, Poizner said that Anthem’s proposed increases could have a “devastating financial impact on hundreds of thousands of its policyholders in California.”
Poizner did not respond to requests for an interview. On Friday, representatives from his office and Anthem’s parent, WellPoint Inc., said the two sides had yet to address the rate hikes despite ongoing speculation that WellPoint might delay them an additional 30 days or limit the increases to 10% to 15% through the end of the year.
Poizner’s office is awaiting the actuary’s study. “Our next action is predicated on what the report says,” said Darrel Ng, a spokesman for the Department of Insurance.
A WellPoint spokeswoman acknowledged Friday that the Indianapolis insurer will not have adequate time to notify customers of any changes within two weeks.
The company, Kristin Binns added, has no agreement with Poizner to extend the delay 30 days.
“No formal decision has been made yet, but it’s unlikely we’ll be in a position, given the timing, to implement any rate increase May 1,” Binns said. “It’s unclear at this point what happens.”
Frustrated policyholders say they have heard nothing from Poizner’s office and little from Anthem beyond a letter in early March informing them that their rates would not change for 60 days.
“I don’t know what we are going to do,” said Mary Feller of San Rafael, Calif., who faces a 39% increase for herself, her husband and daughter that would push the family’s annual insurance bill over $25,000.
Anthem began informing California policyholders of the proposed rate increases in January but backed off after they drew criticism from consumer groups, lawmakers in Sacramento and Washington, and President Obama.
Members of Congress opened an investigation, demanding that WellPoint’s chief executive justify the premiums, which would average 25% for individual policyholders in California.
The uproar gave new momentum to Democrats’ efforts to pass healthcare legislation. They pointed to the Anthem increases as a prime example of the need for an overhaul.
WellPoint and Anthem have repeatedly defended their prices. They argue that premiums are being driven up by escalating healthcare costs, particularly those of doctors, hospitals and drug companies, as well as by the departure of younger and healthier policyholders in the tough economy.
Executives also point out that an outside actuary evaluated the California rates and found them reasonable.
Binns, the WellPoint spokeswoman, called the rate hikes “actuarially sound.”
The company is having “ongoing conversations” with the Insurance Department and its actuary to finalize its report, she said. Those talks, however, have not expanded to include rate increases May 1.
“I’m not familiar with any specific rate discussions at this particular juncture,” Binns said. “We’re in wait-and-see mode.”