Consumer advocates and an activist insurance commissioner in California are renewing a push for premium review authority, while the state exchange is moving ahead with its own version of active purchasing.
California's largest for-profit insurer, Anthem Blue Cross, is coming under fire for its rate increases in individual grandfathered plans. The state's second largest health insurer is increasing premiums by an average of 8.7 percent for roughly 170,000 Californians on grandfathered individual policies, despite a study by the Department of Insurance that found the increases "unreasonable" and a request to lower the amount.
"Anthem Blue Cross is once again imposing an unjustified and unreasonable rate increase on its individual members," said California Insurance Commissioner Dave Jones. The April rate increase ranges as high as 24 percent for about 4,000 members and on average the grandfathered plans' premiums have increased 26 percent over the last two years, according to Jones.
"Until state law changes to give the Insurance Commissioner the authority to stop excessive and unreasonable rate increase, California consumers will continue to suffer unjustified rate increases," Jones said. He was referring to a ballot initiative he spearheaded--but state voters rejected last November --that would have given the commissioner the power to veto premium increases determined to be unreasonable, a system in place in 35 other states.
Actuaries working for Jones suggested Anthem increase the premiums by 1.5 percent, which would have saved the policyholders a collective $33 million or on average $21.60 per member per month.
Anthem sees the medical trends requiring more than that in order to keep offering the grandfathered plans, those purchased prior to the Affordable Care Act which are allowed to continue as long as they do not change in deductibles or benefits.
Anthem said that healthcare costs, particularly spending on speciality prescription drugs, coupled with the older age of the membership on the grandfathered plans necessitated the 8.7 percent increase.
Whether or not a rate review proposal gets another vote in the coming years, Jones is supporting a state bill that would give his office the power to oversee rates proposed for PPO plans.
The California Department of Managed Care oversees HMO products, although cannot veto rate increases. But the overseer of a small, but significant and growing market--the state exchange--is very much acting as an "active purchaser," if not a regulator with rate review.
In the coming months Covered California will be announcing plans and rates for the 2016 plan year. For 2015, some 1.3 million Californians purchased plans in the exchange, and compared to 2014, they had modest premium increases--an average of 4.2 percent--or no increases or even a drop.
"Covered California's team of negotiators actively engaged in vigorous back-and-forth with insurance companies to keep increases at a minimum, deliver networks of doctors and hospitals that meet consumers' needs and give them meaningful choice when shopping for the plan that is the best fit," the exchange boasted last year.