Jones Slams Anthem Over Latest Hike
California Insurance Commissioner Dave Jones on Wednesday denounced a proposed rate increase on individual policyholders by Anthem Blue Cross of California, calling it unreasonable and unjustified.
The rate increase was for some 170,000 enrollees with PPO plans that were “grandfathered” in under the Affordable Care Act.
The increase, which Jones said Anthem enacted on April 1, averaged 8.7%, with some older policyholders seeing increases as high as 24.9%.
According to Jones, Anthem has raised premiums for this group an average of 26.5% over the last 24 months -- including a 16.4% hike in 2014 -- while the benefits being offered have gone unchanged.
“With many Californians still struggling to make ends meet, this rate increase has a significant negative financial impact on consumers,” Jones said at a Sacramento press conference, later adding that “every dollar that is paid by these consumers for health insurance is less money for food, clothing education, housing and other necessities.”
Jones said an analysis performed by his department concluded Anthem’s rate increase was unsupportable from an actuarial basis. He noted that Anthem relied on claims data between August 2013 and last July. Since that time, claims costs have actually been lower than those numbers on which it built its premium increase, according to Jones. He also noted that the rebates Anthem’s can collect on prescription drugs for its enrollees was also underreported, but that the insurer did not change the increase when notified of the error. And the overall pricing trend computed by Anthem was significantly higher than that for other products it sells to individual enrollees.
Jones added that Anthem rejected his recommended premium increase, which averaged 1.5%.
A statement issued by Anthem said that the increases were necessary in light of increasing drug prices. “Recent media reports have shone a spotlight on new drugs driving up healthcare costs across the nation, some of which can retail for up to $1,000 per day. More high cost, mass market specialty drugs are expected to be released in the next year, putting further increasing medical costs contributing to higher premiums,” said spokesperson Darrel Ng.
Jones suggested during a question-and-answer session with reporters that Anthem is trying to nudge enrollees from this health plan into other policies that have more restrictive networks and higher out-of-pocket costs.
Jones also noted his frustration in his inability to overrule any premium increases by Anthem and other insurers. Under current California law, regulators are barred from overturning rate increases by health insurers, and a ballot proposition to do so was voted down last November.
Jones also was irritated by what he said was Anthem’s exploitation of what he called a legal loophole in order to take more of them away from the purview of his office and into that of the Department of Managed Health Care.
“Consumers are not well-served and their protections are compromised when a company is allowed to shift its business to another regulator simply because it does not like the conclusions reached by the first regulator,” Jones said. He added that this particular loophole only applies to Anthem and one other insurer, Blue Shield of California. He is currently sponsoring a bill, AB 1434, that if signed into law would give Jones’ agency regulatory purview over health plans that operate under the guise of the Knox-Keene Act.
Anthem disputed that assertion. “Commissioner Dave Jones inaccurately calls California’s dual health regulators a ‘loophole.’ In fact, the Department of Managed Health Care currently allows any health plan to file and market PPO products,” it said in a statement.
