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CA Department of Insurance

Anthem Blue Cross imposes back-to-back excessive and unreasonable rate increases on California small businesses

News: 2013 Press Release

For Release: April 2, 2013
Media Calls Only: 916-492-3566
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Anthem Blue Cross imposes back-to-back excessive and unreasonable rate increases on California small businesses
Rate increases continue despite small businesses struggle to provide employee healthcare coverage

SACRAMENTO - Insurance Commissioner Dave Jones announced today the Department of Insurance has found the latest rate increase by Anthem Blue Cross Life and Health Insurance Company is excessive and unreasonable. Anthem Blue Cross is increasing rates on its small group health insurance policyholders, while posting a return on equity of 25.2 percent as noted in the company's 2012 financial statements. For some Anthem small business customers, this translates to an alarming 12-month increase of 22.9 percent. The average 12-month increase for the policyholders impacted by this rate filing is 10.5 percent. Anthem's April 1st small group rate increases ultimately impact more than a quarter of a million healthcare consumers.

"Tough economic times in California have been particularly challenging for small businesses. These ongoing and excessive rate increases are simply unsustainable, as many small businesses struggle simply to survive," said Commissioner Dave Jones. "Anthem Blue Cross is imposing yet another unreasonable and excessive rate increase on small employers when the company is posting a 2012 profit-as measured by return on equity-of more than 25 percent."

Orange County small business owner Valerie Rhodes will join Commissioner Jones by phone to share her story of dramatically increasing health insurance premiums and the financial impact on her business and family.

Department actuaries carefully reviewed Anthem's rate filing and found a number of unreasonable components, including overestimated future claims and utilization, excessive return on equity, and charging policyholders in 2013 for healthcare reform fees and taxes that are not even being collected by the federal government until 2014. In fact, the federal government has yet to even determine the amount of some of those fees and taxes.

The April 1, 2013 rate increase will impact approximately 45,000 healthcare consumers within 7,000 small business employer groups whose policies are up for renewal between now and June and is also imposed on the rest of the small business policyholders as their polices renew throughout the rest of the year-ultimately impacting as many as a quarter of a million healthcare consumers. This is the second time this year Anthem has imposed a rate increase on its small business customers despite the Commissioner's determination that the rate increase is unreasonable. Neither California law nor the Affordable Care Act prohibits health insurers from imposing unreasonable and excessive health insurance rate increases. State law does however prevent excessive rate increases for other lines of insurance such as auto, homeowners and medical malpractice insurance.

Jones requested Anthem instead reduce the average rate by 2.5 percent for these small businesses, which is an average reduction of 7.3 percent from the filed rates. If Anthem had agreed to lower the rates policyholders would have saved $38 million over the rates that Anthem is now imposing. 

The California Department of Insurance, established in 1868, is the largest consumer protection agency in California. Insurers collect $310 billion in premiums annually in California. Since 2011 the California Department of Insurance received more than 1,000,000 calls from consumers and helped recover over $469 million in claims and premiums. Please visit the Department of Insurance website at Non-media inquiries should be directed to the Consumer Hotline at 800.927.4357. Telecommunications Devices for the Deaf (TDD), please dial 800.482.4833.

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