Less than a week after Blue Shield of California shelved its planned increases for individual members, Anthem Blue Cross has decided to decrease its planned rate hike and increases in co-payments and deductibles for more than 600,000 members enrolled in its family plans.
Anthem Blue Cross entered the national spotlight last year, during the final stages of the debate on federal health reform, when it proposed rate increases of 39 percent for its members in California.
The 9.8 percent average premium increases for 2011 were originally scheduled to take effect in July. The proposal also included provisions for increasing co-payments and deductibles, as well as 1.3 percent increases for each month after April the company delayed its increases, according to information from the California Department of Insurance. Taking those factors into account, the effective average increase would have been 16.4 percent, according to the state's Department of Insurance.
[See also: Anthem Blue Cross takes additional heat over 39 percent premium increase; Blue Shield of California proposes 59 percent rate increase]
"In our review of the rate filing, we also reached different conclusions about the trend of medical prices, utilization and membership than Anthem had reached in its rate filing," said California Insurance Commissioner Dave Jones. "Based on this analysis and the impact of an over 16 percent increase in rates on Anthem Blue Cross policyholders, I asked Anthem Blue Cross to reconsider its rate increase."
Instead, Anthem will increase rates to policyholders by 9.1 percent on July 1 and withhold planned increases to co-payments and deductibles until Jan. 1, 2012. The effect, Jones noted, would be a savings of more than $40 million for Anthem members.
Anthem Blue Cross, which noted its losses for 2010 on individual policies were near $110 million, will also lose money on this segment of business in 2011, officials said.
"We are the largest health plan in the state of California, and our mission is to ensure quality healthcare for residents of the state at the most affordable price," Anthem President Pam Kehaly said in a statement. "We are pleased with the resolution of this matter, but feel all stakeholders in the healthcare market in the state must do more to control the unrelenting rise of underlying healthcare costs. We plan to be an active participant in helping forge that dialogue and bringing together the major healthcare players to find the best solutions for California consumers."
That statement is similar to the one issued last week by Blue Shield of California CEO Bruce Bodaken, after the insurer decided not to pursue rate increases – some of which would have been as high as 59 percent – for its individual policyholders.
"We have long acknowledged that the individual health insurance market is broken and we are pleased that the rules will change in 2014," Bodaken said. "But health reform will succeed only if we restrain the rising cost and utilization of medical services that is driving premium increases."
Jones called the decisions by the private insurers welcome news for California consumers, and said they highlight the need to give his office the power to deny any rate increases it deems excessive.
"Health insurers still hold all the cards and consumers remain at their mercy. As a member of the state Legislature I authored three bills over five years to give the insurance commissioner the authority to reject excessive rate hikes," he said. "The bill I introduced as a member of the state Legislature has been re-introduced as Assembly Bill 52 by Assembly Member Mike Feuer. Californians should write, call and email their legislators and urge them to support Assembly Bill 52."