Although Anthem Blue Cross of California announced last month it would lower or delay its planned May 1 rate increases for individual policyholders, it still plans to raise premium rates by as much as 26 percent for roughly 150,000 members.
Anthem's announcement to reduce the hike to an average of 9.1 percent from its earlier proposed increase applied only to policies regulated by the California Department of Insurance. The remaining individual plans are overseen by the Department of Managed Health Care, which typically regulates HMOs. However, in this case, all the Anthem policies involved are PPO plans, reports the San Francisco Chronicle.
The managed healthcare department previously said that Anthem's May 1 rate changes were vetted by an outside actuary and not found to be "unreasonable or unjustified." But after Anthem agreed to cut its rate hikes for the 600,000 customers under Jones' jurisdiction, the department took a second look at Anthem's filing, finding that most of the Anthem policyholders it oversaw would be paying more for comparable products than those overseen by the insurance department, according to the Los Angeles Times.
Consequently, the managed health department asked Anthem to justify the cost differences and report back by April 25--just days before the new rates take effect. "This is unfair to consumers, and we're asking the plan to explain why these rates are not unreasonable or unjustified," department spokeswoman Lynne Randolph told the LA Times.
Anthem said the differences in rate increases are based on several factors. "It is important to note that the DMHC and California Department of Insurance (CDI) products and membership mix are quite different and as such reflect very different medical costs," spokeswoman Kristin Binns told the Chronicle. "In addition, Anthem's individual DMHC insured pool has been shrinking, contributing to higher utilization of medical services for the DMHC regulated business. As a result, premiums for DMHC products tend to be higher than for CDI products."
She added that the individual rate increases are not unique to Anthem, but rather represent an "economic reality faced throughout the entire industry and reflect the fact that healthcare costs continue to escalate faster than the growth of premiums," she told the LA Times.