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Anthem Blue Cross fails to justify rate increase on individual grandfathered health insurance policies

News: 2015 Press Release

For Release: April 22, 2015
Media Calls Only: 916-492-3566
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Anthem Blue Cross fails to justify rate increase on individual grandfathered health insurance policies
Nearly 170,000 consumers hit with yet another unreasonable health insurance rate increase

SACRAMENTO, Calif. - Insurance Commissioner Dave Jones announced today that Anthem Blue Cross failed to justify the average 8.7 percent premium increase it imposed on consumers with individual grandfathered health insurance policies. 

Based on an independent analysis by Department of Insurance actuaries, Commissioner Jones requested Anthem lower the rate increase, which would have resulted in approximately $33.6 million in savings for California consumers, but Anthem refused. Anthem's most recent unjustified rate increase falls on nearly 170,000 consumers with individual grandfathered plans.

The April 1, 2015 rate increase for Anthem's individual grandfathered policyholders imposes an average rate increase of 8.7 percent with a maximum increase of 24.9 percent on some policyholders. Over the last 24 months Anthem has raised rates on members in these grandfathered policies an average of 26.5 percent. 

"Anthem Blue Cross is once again imposing an unjustified and unreasonable rate increase on its individual members," said Insurance Commissioner Dave Jones. "Until state law changes to give the Insurance Commissioner the authority to stop excessive and unreasonable rate increase, California consumers will continue to suffer unjustified rate increases."

The Department of Insurance finding that Anthem's rate increase is unjustified and unreasonable is based on Anthem's claims experience, prescription rebate amount, an excessive pricing trend, and other projections that were not justified.

The commissioner also mentioned AB 1434 (McCarty), legislation he is sponsoring that would close a loophole that allows Anthem Blue Cross and Blue Shield to regulator shop and avoid paying hundreds of millions in premium taxes to the state general fund.

Media Notes:

Unlike other insurance lines governed by Proposition 103, such as auto and home the commissioner's authority is limited to reviewing health insurance rate filings and making a non-binding determination. Neither state nor federal law gives the commissioner authority to stop excessive health insurance rates from being imposed on policyholders.

  • Given Anthem's enrollment estimates for the policy year, the average savings would have been $21.60 per member per month if Anthem had lowered its rates to the level the Department's independent actuaries found justifiable.
  • Definition of grandfathered policies: Grandfathered policies are defined as those group or individual health plan policies purchased before March 23, 2010 and are exempt from several requirements under the Affordable Care Act. 
  • Audio recording is available to the public.

The California Department of Insurance, established in 1868, is the largest consumer protection agency in California. Insurers collect $289 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 web site at Non-media inquiries should be directed to the Consumer Hotline at 800.927.HELP or 213.897.8921. Telecommunications Devices for the Deaf (TDD), please dial 800.482.4833.

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