Anthem Blue Cross will go forward with rate hikes, execs tell Calif. lawmakers

Anthem Blue Cross executives told California lawmakers Tuesday that they plan to go ahead with a rate hike of up to 39 percent for individual health insurance policies.

"Appearing before the state Assembly's health committee, the officials said that they believed rate increases for individual health insurance policies, delayed until May 1 while being reviewed by the Department of Insurance, would survive scrutiny by regulators," the Los Angeles Times reports. "The testimony came as members of the committee lashed out at Anthem for its proposed rate hikes and its corporate profit a day before the rate controversy moves to Washington, where a congressional subcommittee holds a hearing Wednesday." The rate premium hike was to take effect March 1, but was "delayed while independent actuaries, hired by California's insurance commissioner, review whether they are justified under state law," which requires that insurers spend a minimum of 70 percent of premium costs on medical claims.

During the hearing, "Anthem's president, Leslie Margolin, told the committee that much of the public frustration over the rate hikes was misdirected and should be aimed at the nation's healthcare system. 'This debate and this inquiry cannot and should not be just about the insurance industry or the delivery system or regulators or legislators or customers or brokers,' Margolin said" (Helfand, 2/24).

The Associated Press/Philadelphia Inquirer: The lawmakers "said they were astonished" by the rate hike. "'How are Californians supposed to afford health insurance with these rate increases?' Democratic Assemblyman Dave Jones of Sacramento asked while opening the hearing. 'What level of profit is enough?' Jones, who chairs the committee, said the state cannot wait for the federal government to act" (Hindery, 2/24).

The Sacramento Bee: "The Anthem Blue Cross executives said higher premiums were needed to cover the rising cost of doing business, citing escalating costs for medical care and the net loss of 25,000 subscribers last year. Many of those who left were young, healthy people who are less likely to need health services and whose premiums subsidize those who more frequently require services." But the insurer has also "had a long combative history with legislators in California and on Capitol Hill who have pushed unsuccessfully for health care legislation. In 2007, the company spent $2 million on an advertising blitz that helped derail Gov. Arnold Schwarzenegger's campaign to require all Californians to obtain health insurance and force insurers to issue policies to anyone, regardless of health" (Calvan, 2/24).

San Francisco Chronicle: "The criticism continued Tuesday with committee members threatening the insurer with rate regulation similar to that on home and auto coverage as a way to rein in premiums. State regulators do not have the authority to review and approve health insurance rates. 'Do we have to pass legislation to make you do the right thing?' asked Assemblyman Hector De La Torre, D-South Gate (Los Angeles County). 'I think we do the right thing, and we try to do the right thing every day, Margolin responded" (Colliver, 2/24). 

NBC Los Angeles: "About 150 physical therapists and patients protested outside the offices of Anthem Blue Cross California today, while company executives faced lawmakers up in Sacramento. … These physical therapists dropped their contracts because Blue Cross cut their reimbursement rates to those in the physical therapy provider network" (2/23).

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This article was reprinted from khn.org with permission from the Henry J. Kaiser Family Foundation. Kaiser Health News, an editorially independent news service, is a program of the Kaiser Family Foundation, a nonpartisan health care policy research organization unaffiliated with Kaiser Permanente.