California Insurance Commissioner Dave Jones on Wednesday called on Anthem Blue Cross to lower rate hikes for some certain individual policyholders, calling the company’s recent rate changes “unjustified and unreasonable.”
Anthem, based in Thousand Oaks, has increased average premiums 8.7 percent this year for individual policies that do not meet the full specifications of the Affordable Care Act, but were allowed to be legally issued through a “grandfather” exception by the Obama Administration, according to an analysis by the Department of Insurance.
The rate increase means Anthem, the largest for-profit insurer by market share in California, has raised rates on members in these grandfathered policies an average of 26.5 percent over the last two years, the analysis found.
Previously, Jones requested Anthem lower the rate increase, but Anthem refused. About 170,000 people in California have individual grandfathered plans from Anthem, a unit of Anthem Inc. in Indianapolis.
“Anthem Blue Cross is once again imposing an unjustified and unreasonable rate increase on its individual members,” Jones said in a statement.
By law, the commissioner lacks authority to change health insurance rates. All he can do is make a non-binding determination.
Anthem said in an email to the Business Journal, that its “rate filing reflects the fact that escalating health care costs are an economic reality faced by the entire industry.”
The company noted that federal law requires 80 percent of premiums be paid out for medical services, and these policies are forecast to exceed that threshold. Also, these grandfathered policies can’t add new members, so the existing pool of clients will age over time and age correlates with higher medical expenses.
“Even with the rate change, in many cases these policies have a lower monthly premium than those sold on the individual market today,” the email stated.