Anthem should be barred from small business exchange, California regulator says

The California insurance commissioner wants to prevent Anthem Blue Cross from participating on the state's small business exchange because the insurer has had excessively high rates.

"Anthem has engaged in a pattern of excessive and unjustifiable rate increases for its small employer customers and therefore they should not be permitted to participate in California's small employer health exchange," Insurance Commissioner Dave Jones said in a statement Thursday.

Since he doesn't have direct oversight of the exchange, Jones made the recommendation to Covered California, the agency implementing the state's exchanges. His advice is based on Anthem's "pattern of excessive and unjustified premium increases," including three recent rate hikes on small business owners–a 10.6 percent increase in January, a 10.5 percent increase in March and an upcoming 7.6 percent in July, the Sacramento Business Journal reported.

Anthem defended its rate increases, saying they reflect the "economic reality" of rising healthcare costs facing the entire industry. Despite its rate increases, Anthem said the profit margin on its small business market last year was just 1 percent, reported LifeHealthPro.

What's more, if Anthem is barred from the small business exchange, competition will be limited. "Removing Anthem, one of the largest health plans in the small-group market, from [the small-business exchange] would eliminate much of that competition," Anthem Spokesman Darrel Ng told the Los Angeles Times.

Anthem might not be the only plan targeted for high rate increases. "This is the first company for this recommendation," Jones said, adding that his office "will look for similar patterns and practices at other plans."

To learn more:
- here's the statement
- read the Los Angeles Times article
- see the LifeHealthPro article
- check out the Sacramento Business Journal article

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