California insurance chief: Keep Anthem out of small-biz exchange

California Insurance Commissioner Dave Jones, in an unusual move, wants Anthem Blue Cross barred from the state’s new health exchange for small businesses because of the company’s excessive rate hikes in the past.

Thursday, Jones asked Covered California, the state agency implementing the federal healthcare law, to prevent Anthem Blue Cross from participating in a new market for employers with fewer than 50 workers.

“I have determined Anthem Blue Cross has had a practice of excessive or unjustified rate increases,” Jones said.

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The state has already picked Anthem Blue Cross for its larger exchange for individuals that will sell policies next year to an estimated 5 million Californians who don’t get health coverage through work.

The commissioner’s request wouldn’t affect that individual market or Anthem’s ability to sell to small firms outside the state-run exchange. Anthem is a unit of industry giant WellPoint Inc., which runs Blue Cross plans in 14 states overall.

Covered California is expected to announce the health insurers and their proposed rates for the small-business exchange in August.

Peter Lee, executive director of Covered California, said the agency will consider Jones’ recommendation as one of many factors in evaluating bidders for the small-employer market.

“We will make a decision between now and August on what makes the most sense for consumers,” Lee said.

Anthem said its rate increases reflect the “economic reality” of rising healthcare costs. The company said small firms would lose out on meaningful competition if it is barred from the exchange.

Overall, Anthem said its small-business rates are going up 11.5%, on average, this year.

“Removing Anthem, one of the largest health plans in the small-group market, from [the small-business exchange] would eliminate much of that competition,” said company spokesman Darrel Ng.

Jones and Anthem Blue Cross have clashed repeatedly over rates.

In January and again in April, Jones scolded Anthem Blue Cross for proceeding with rate hikes for thousands of small businesses that he determined were excessive. The company rejected his requests for lower rates.

Jones has objected to Anthem’s estimates for patients’ future medical use and costs as well as the company’s collection of fees from customers that are not imposed under the federal healthcare law until next year.

Under current state law, Jones can publicly declare an increase unreasonable, but he has no power to stop an insurer from imposing it.

A ballot initiative scheduled for November 2014 seeks to change that and give state officials that power. The insurance commissioner has that authority for property and auto policies under Proposition 103.

Health insurers, doctors and business groups oppose the proposed ballot measure, saying it wouldn’t address the underlying reasons for rising medical costs.

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