Jones Blasts Another Premium Increase
California Insurance Commissioner Dave Jones has locked horns with Anthem Blue Cross of California again, blasting the insurer for another premium hike he has declared unreasonable.
At a press conference in Sacramento on Tuesday, Jones called an average rate hike of 5.2% by Anthem Blue Cross levied April 1 on more than 45,000 individual policyholders and 7,000 small business owners as unreasonable and excessive.
Altogether, Jones estimated that Anthem has raised premiums for this group by 10.5% over the past year, and 16.3% over the past two years. Some policyholders have seen their rates go up more than 22%, he added.
Nevertheless, Jones has no to legal authority to stop Anthem's rate hike. And while the insurer agreed earlier this year to reduce some increases, it declined to do so in this instance – a tack also taken by San Francisco-based Blue Shield of California when Jones criticized a rate hike it implemented last month.
A voter initiative that would grant power to his office and the Department of Managed Health Care to stop rate hikes they deem excessive will be on the ballot in November 2014.
“This is deja vu all over again,” Jones said, claiming that as in previous regulatory filings to justify the rate increase, Anthem has overstated the cost of providing care to the enrollees. He said Anthem's 5.7% utilization trend estimate was too high. He also said the insurer was considering the costs of two Affordable Care Act-related fees into its actuarial process, even though they do not take effect until 2013.
Jones also blasted the money Anthem is making off its small group and individual policyholders, claiming the insurers return on equity last year was more than 25%.
As a result, Jones asked Anthem to cut premiums an average 2.5%, which the health plan has declined to do.
Anthem officials claim they have less than a 1% profit margin on its small group book of business, and that higher healthcare costs account for the need to bump up the premiums.
Altogether, the small business groups affected insure about 250,000 employees.
Jones had a couple of small business owners present at the press conference. Jerry Bircher, who owns an office supply business in the Sacramento suburb of Rancho Cordova, said the rate hike would cost his company an additional $5,000 a year – and require about $252,000 in additional revenue based on his current profit margins in order to cover the expense.
The California Department of Insurance also announced it had signed Consumer Watchdog to a high five-figure annual contract to review future regulatory filings. The Santa Monica-based advocacy group has drawn fire for its confrontational tone with insurers. It is the leading sponsor of the ballot initiative intended to give Jones's office the opportunity to block future rate hikes.
Jones's office awarded a similar contract last year to Consumer's Union.
According to Consumer Watchdog – which reviewed Anthem's actuarial analysis for the most recent rate hikes – it should have decreased average annual premiums by 0.5%.
“Anthem is overestimating future healthcare costs and padding its surplus to impose higher rates that cannot be justified,” said Carmen Balber, Consumer Watchdog's executive director. “California’s small business owners can’t help put our economy back on its feet, or even provide their employees health coverage, if we allow insurance companies to rip them off with impunity.”
