SANTA MONICA, Calif., April 29 /PRNewswire-USNewswire/ -- Consumer Watchdog said that the California Department of Insurance's disclosure today that independent actuaries found Anthem Blue Cross made major mistakes in filings for its 39% premium increase should fuel a national movement to require all health insurers to justify all of their rates.
The Department found "substantial errors and flaws" in Anthem's rate application, which the company withdrew today. Consumer Watchdog also said Congressional investigators should look into whether Anthem Blue Cross executives made misrepresentations to Congress in testimony claiming the company's rate increase was actuarially sound.
"The California Department of Insurance's report should be Exhibit A in the case for making health insurers prove the need for premium increases to government agencies before the rates take effect," said Consumer Watchdog president Jamie Court. "Americans will be required to show proof of health insurance by 2014 and insurance companies should be required to show that premiums they charge are reasonable. But for the Department of Insurance's sudden interest in the Anthem filing, this insurance company would have snuck an unreasonable increase by under the nose of regulators and patients would have been priced out of their health insurance. Every premium increase should be subject to strict review given that every American will have to purchase health insurance if they don't receive subsidies or coverage through an employer."
California Assembly Bill 2578 by Assembly Member Dave Jones (D-Sacramento) and Assembly Member Mike Feuer (D-Los Angeles) would require HMOs and health insurers to seek "prior approval" for rate increases and justify overhead costs -- just as many lines of insurance, including auto, already do under California's landmark insurance reform law Proposition 103. Proposition 103 does not apply to health insurers. Consumer Watchdog founder Harvey Rosenfield wrote Proposition 103 which was approved by voters in 1988, not long after the California legislature mandated the purchase of auto insurance.
Federally, U.S. Senator Diane Feinstein is pursuing legislation to allow federal regulators to stop unjustified premium increases.
SOURCE Consumer Watchdog