Anthem Blue Cross Agrees to Lower Rate Increase for Some Small Group Health Insurance Products
News: 2011 Press Release
Insurance Commissioner Dave Jones announced today that after his department reviewed a proposed quarterly rate increase by Anthem Blue Cross, the company agreed to cut its quarterly premium increase in half - from 6.0 percent to 3.0 percent on average for certain health insurance products sold in the small group market. This rate filing contained proposed quarterly rate increases for the Solution 2500 PPO, Solution 3500 PPO and Solution 5000 PPO ("Solutions Plans"), which are purchased by small businesses with 2-50 employees.
The rate increases for these Anthem Blue Cross PPO products affect nearly 18,000 members and go into effect on July 1st. The average quarterly increase will be 3 percent (with a maximum increase of 4 percent). State law for small group policies allows the insurer to apply a risk adjustment factor of 0.90 to 1.10 to the small employer group standard employee risk rates. This creates a "rate band" within which the carrier may adjust employer rates for risk factors such as previous use of health services or industry type. The estimated total savings to small employers who have the Solutions PPO plans as a result of Anthem's decision to reduce the rate increase is $2 million. This rate filing is one of the first small group rate filings that the Department of Insurance has reviewed under the new state law that went into effect January 1, 2011.
"Health insurance premiums have increased substantially in the last several years and many small businesses have given up on providing health insurance, while others are struggling to maintain coverage for their employees. I appreciate Anthem Blue Cross' agreement to reduce its proposed quarterly rate increase for its Solution PPO products. Small businesses that have purchased the Solutions PPO product will still experience a significant cumulative increase in rates due to increases in prior quarters," explained Insurance Commissioner Dave Jones.
Insurance Commissioner Jones supports AB 52 by Assemblymember Feuer, which would limit health insurance carriers to one rate increase per year per product and would give the Insurance Commissioner the authority to reject excessive rate increases. Currently, the Department of Insurance reviews proposed rate increases, but the health insurance carriers can implement those rate increases without approval from the Insurance Commissioner, who lacks the authority to reject excessive rate increases. AB 52 passed the State Assembly and will be considered by the Senate Health Committee on June 29th.
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 www.insurance.ca.gov. 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.