Jones May Move On Early ACA Fees
Insurance Commissioner Dave Jones has no legal authority to block California's insurers from imposing premium increases on consumers, but he bluntly noted at a press conference earlier this week that he might take legal action against Anthem Blue Cross of California and other health insurers to halt early collection of fees associated with the implementation of the Affordable Care Act.
Jones, who has repeatedly made his inability to regulate health insurance premium increases an issue since he was elected commissioner by California's voters in 2010 and has backed ballot measures to expand his authority, condemned Anthem last Tuesday for its premature collection of ACA-related fees. The fees are not mandated until 2014, but Anthem is collecting them during the 2013 calendar year anyway, Jones said.
One of the fees is being used for the administrative enactment of ACA, while a second fee is meant for insurers to defray the cost of carriers to purchase reinsurance if they have to cover sicker-than-average populations.
Anthem Blue Cross spokesperson Darrel Ng said the imposition of the fee would nominally affect its enrollees. “ACA fees account for approximately 75 cents per person per month,” he said, or $9 per year.
However, Jones noted that the fees would quickly add up if other insurers follow suit.
“If every health insurer does the same thing by imposing these fees, it would be a $35 to $40 million hit to consumers,” Jones said. “We believe it is unlawful.” He added that some insurers are foregoing the fees in 2013, but others intend to impose it. He did not mention specific carriers.
Asked if his department would take legal action on the fees or request assistance from the California Attorney General's office to block the collection of the fees, Jones said “we will be evaluating all legal remedies for the fees.”
Meanwhile, Jones excoriated Anthem for its plan to raise rates an average of 10.6% on small businesses and small employer groups, and 19.5% over the next 18 months, including planned reductions in the benefits offered. The hikes would affect about 250,000 enrollees, according to Jones. “It is unreasonable,” he said.
After his department performed an actuarial examination of its rate increase filing, Jones claimed Anthem was basing its increase on faulty medical underwriting, making an assumption its medical costs will rise 6.4%.
“That's much higher than their past claims experience warrants,” Jones said. “The reasonable trend is only 4%.”
Ng disputed Jones's contention, claiming that the rate increase would affect only 52,400 enrollees, and that the average annual rate increase would be 7.5% including the benefit reductions.
“The rate increases in the small group market are not unique to Anthem Blue Cross, but rather represent an economic reality faced throughout the entire industry as healthcare costs continue to escalate faster than our state’s economy as a whole,” Ng said. “In an effort to offer the most affordable healthcare coverage possible, we have reduced our estimate of 2013 medical cost trend to its lowest levels in years.”
Recently released data from the Office of the Actuary of the Centers for Medicare and Medicaid Services indicated that healthcare spending growth increased just 3.4% in 2011 – the same levels as 2010 and 2009 – representing the lowest historical cost trends in more than 50 years. However, spending on private health insurance grew at a slightly higher annual clip of 3.8%.
"Health insurance rates have risen five times greater than the rate of inflation over the last decade, by 153%,"said Jamie Court, president of Consumer Watchdog. The advocacy group has sponsored a ballot initiative that would give Jones the power to regulate rates. Voters will decide on it in 2014.
