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California’s Insurance Commissioner Dave Jones said yesterday that his department has found the latest rate increase by Anthem Blue Cross Life and Health Insurance Company are excessive and unreasonable.

His remarks followed Anthem’s announcement that it is increasing rates on its small group health insurance policyholders, while posting a return on equity of 25.2% as noted in the company’s 2012 financial statements. For some Anthem small business customers, this translates to a 12-month increase of 22.9%.

Jones said the average 12-month increase for the policyholders impacted by this rate filing is 10.5%. Anthem’s April 1 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,” Jones said. “These ongoing and excessive rate increases are simply unsustainable, as many small businesses struggle simply to survive.”

“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%,” he added.

The state’s Insurance Department actuaries 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, Jones said. In fact, the federal government has yet to even determine the amount of some of those fees and taxes.

The April 1 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. It will also be 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, Jones said.

This is the second time this year Anthem has imposed a rate increase on its small business customers despite Jones’ determination that the rate increase is unreasonable. Still, neither California law nor the Affordable Care Act prohibits health insurers from imposing rate increases. State law does, however, prevent excessive rate increases for other lines of insurance, such as auto, homeowners and medical malpractice insurance.

Jones has asked Anthem to reduce the average rate increase by 2.5% for small businesses, which is an average reduction of 7.3% from the filed rates.

If Anthem had agreed to lower the rates, policyholders would have saved $57 million over the rates that Anthem is now imposing, Jones said.


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34 Comments

  1. Just the beginning of all small/medium/semi-large businesses dropping their coverage to cut unreasonable and escalating insurance costs and letting the Obamacare “affordable care safety net” of the State Exchanges handle it when they are established… Within 5 years, everyone OTHER than those who work for the largest and most profitable companies that still need health benefits as a differentiating factor in retention and hiring will be forced onto the equivalent of MediCAL, MediCare, Medicaid, or a very low quality group plan… Thanks Dems… the drain is swirling…

  2. Totally disagree with Matty (from a Blackhawk neighborhood no less where he/she probably has comfy employer provided health benefits). I was one of the people who got the Anthem Blue Cross letters saying my premium was going up 25%, after a similar increase the year before. I can’t wait for the Calif exchange to open in October and have choices without worry of not being accepted, surcharges for pre-existing conditions, caps and limits. Currently, when you are a small business, or self employed individual, you can’t just shop around for new insurance on the free market – you have a fear of leaving the policy you’ve got – another company may not accept you or add all kinds of surcharges if you (gasp) take a prescription drug or any other hint of an issue. Bring on the Affordable Care Act!

  3. Totally disagree with KM. You may get a choice, but health care coverage will decline dramatically once Obamacare is in full force. When you look at what you get for those cheaper prices, you’ll realize you are getting the short end of the stick. Hope you don’t have some major emergency once you’ve changed as you might lose your house over it!

  4. KM (and others),

    The California Exchange sure does sound good! (I hope it works.)
    But what makes you think it will be cheap?

    All those features you mention should cost a lot. (Features: “without worry of not being accepted, surcharges for pre-existing conditions, caps and limits”)

    There is no such thing as a Free Lunch–don’t you get it!?!
    Maybe you can shift YOUR costs to someone else somehow, but it’s got to be paid for someway.

    DemoCare (ObamaCare) has not provided a real solution to the actual problem of rising medical costs.
    And the costs for these new Bureaucracies (The Exchanges, the Committees, etc) will add new administrative costs to everything.
    Rates for insurance plans will have to go up. (Why are we surprised here?)

    Perhaps “government” medicine and plans will be cheap, but only if they are SUBSIDIZED by the Taxpayers.

    It will take years to really see how this all plays out and what it really costs. (How often does anything that the Government do, cost us LESS?)
    Thanks, Dems! Way to mess with a medical system that many foreigners were envying and flocking to America for. (This should be an even bigger draw for, especially, “poor” immigrants.)

  5. Folks….the premiums are all rigged, there is no real price competition amongst the nationals…Blues, Aetna, United Healthcare, Health Net and Cigna. The Blue Cross Blue Shield Association is being sued in numerous states for anti-trust violations. There are now only 37 members of the BC/BS Assn (based in Chicago). To be a member you must agree to not compete against other Blues in other states, hence the lawsuits. A key part of the Affordable Care Act was to break down these state barriers and allow more aggresive competition. I have over 25 years experience in healthcare and I worked for Anthem for 3 years on the inside, sitting in meetings all day with Medical Directors and Actuaries. Those haters that politicize the Affordable Care Act provisions forget that every President back to Richard Nixon has tried to pass health insurance reform…both Republicans and Democrats. Matty is full of hogwash, the fact is the United States and South Africa are the ONLY industrialized nations in the West that do not have cradle to grave government administered health insurance. Wake up people. Remember the leading cause of bankruptcies in the US is health care related costs…your daughter gets a rare disease and in this country you go broke. I’m sure a number of readers on this thread have had that experience. We are a better nation than that…aren’t we ??

  6. Believe me these escalating premiums for Anthem “Individual” policy holders have been going on long before “Obamacare” was even an idea.

    I have been an Individual Anthem policy holder since 2002. My premiums have gone up from around $250 to $1,300 in 2011.

    My lowest increase was 15% and ranged up to 30% each year and a couple of years I had 2 increases in one year.

    I was in a group where we could not move out of our current the policy. This was called the “death spiral” (no new members were allowed and old members could not move to a lower cost Anthem policy). Anthem was subsequently sued and the settlement allowed members to utilize a one time movement to lower cost policies that had much higher deductibles.

    Meanwhile I am subsidizing all of you that have group insurance (corporate welfare) through your employer (you do not pay income taxes on this benefit). This is an “Entitlement” that we do not hear much about.

    I used to get so angry when I saw the “tea baggers” or lemonade drinkers whatever you want to call them waving their signs in Danville protesting “Obamacare” as socialism, when their own medical care is heavily subsidized. Most of them do not have a clue regarding their own insurance subsidies, they are socialist through their own ignorance. The employer provided group insurance drives up medical costs for everyone, especially individual group policy holders.

    If you want to complain about Obamacare, I will agree 100%, but only if we all have the same types of policies. No employer provider group insurance (I am tired of paying for your tax benefit). Let some of you feel the pain of 20% annual increases, and see how long it will be before you are screaming for help.

    Our current system needs to be blown-up. The only way medical costs will go down is when nobody is subsidized.

    It is remarkable how many righties always complain but never have their own ideas to address problems.

    A question to ask yourselves is “How is my current medical costs subsidized? When you can answer this question with “I am not subsidized”, then you will have a right to complain.

    JRM above was very correct about bankruptcies and rare diseases, I hope none of you or your relatives face this fact.

  7. No, KM, I do not work for a large comfy employer (full disclosure, my wife does but all IT jobs there will move to Texas within 2-3 years), and I’m not sure why my relative location within Danville vs. yours would indicate that I do. Quite the opposite, as I would assume that a large percentage in the Blackhawk area own/operate their businesses and will be making life altering health care decisions for their employees in the next 2 years. Anyway, I actually work for a very small company in San Ramon and get my personal health benefits from it. Our renewals reset in May/June, and our carrier happens to be BC-Anthem. The sticker shock (assuming nothing changes) WILL prompt our Board to start down the path of considering either switching carriers, making us pay a bigger pct, or dropping it as a benefit altogether and force us to the Exchanges. This s**t is real.

    KM – you have been sold a myth (i.e. toxic KoolAde) of “affordable care” and choice. Yes, the good parts like general acceptance, accepting pre-existing conditions, and removing the “donut hole” will be there, but the new law does not preclude what insurance companies will charge or what “choice” you will have with the Exchanges. The rumor going around now is that there will only be one plan to choose when it starts…and it will be expensive. People think they are getting “totally free” care by voting for Obama and his other DEM Congressional minions, which is simply not going to happen. It isn’t going to be the case at all unless you are already qualified for MediCal here, and those criteria will be tightened up so the State doesn’t go broke. I can practically guarantee that every small-mid size company with 50+ employees (or combo of emps and FTEs) will do whatever they can to 1) get under 50 by laying off people to avoid many of the rules if possible OR 2) consider dropping the plan they have and just paying the fine on emps above 30 since it is much CHEAPER to do so than pay for or subsidize the premiums!! There is no utopia of “good affordable health care for all”… it will settle out over the years as rationing, long lines for services, and a reduced level of care for most Americans… Without some major changes to the premise of Obamacare, bank on what I’m saying coming to pass.

  8. James – I am a Republican who is sympathetic to tea party complaints in this area of policy, and know exactly how this all works, so don’t lump me in with your generalization. I covered my family for 16 years (1995-2011) as an independent consultant 1099 paying 100% for our family of 4’s health care while on a Blue Shield PPO. Granted Blue CROSS is practically famous for being abusive in their rates, but ours raised steadily as well. Our avg cost per year for the last 3-4 years was about $11K for premiums and PPO pay outs from a HSA pre-tax account, which had some tax benefits that I won’t apologize for using. Our Blue Shield was going to ratchet up a few hundred a month again when we hit 45, so we when we received offers to do so, we became direct employees of our companies. Certainly, one of the decision points in the interim was to save on health care…no doubt… but these options will be going away, and I’ll yearn for the days it only cost us $11K/year after all this utopian shell game kicks in.

  9. Eliminate the gobblegook Matty, your wife took the IT job, job moving to Texas, and you guys are screwed. Back to Mr. Blue Shield for $1500.00 per month. You are obviously educated so a question for you… With the Affordable Care Act you will soon have an open exchange that will bid “the AMERICAN WAY” to be a provider on the exchange. Matty…what the hell is wrong about an open market to compete for those $1,500.00 you pay each month? Please help me understand why you are against open competition that is devoid of regional monopolies? Trust me, the Blues are FREAKED OUT….

  10. JRM – Forcing people into a market with 950 pages of new “you must take everyone” rules for carriers is not an “open market”. It might be “consistent”, but not open. The way it is/was before Obamacare is actually more of a true competitive market for small group/company plans. The carriers make much less profit on them than they do with the big company plans, and so won’t be heartbroken if they go away. One really sick person skews their numbers big time in small company plans.

    As we will not qualify for any subsidies, the Exchange plans in Covered California will definitely be more costly than our current plans and the individual plan we had through 2011 even with the 45+ age increases we were going to see. An unsubsidized plan is estimated to be around $15K/year at the low end according to the Covered California website, but those numbers will be out soon as the “non-binding but interested providers” actually must submit their final plans to play or bail out. As most carriers will not want the initial influx of the “low end insurance market” (unhealthy, older, poorer, unemployed/underemployed participants) as they must by playing in the Exchange at all, the prevailing thought is that there will be very few plans to choose from at the 2014 changeover… others disagree and think there will be 20 plans for the Bay Area populace… we will see who is right…

    Luckily, I believe both of our current plans will be grandfathered, which is great as long as they are still available to us. My wife’s will be, but we aren’t going to move to Texas if her job moves… Mine…we’ll see as they will likely be too costly in the next 2-3 years…at least with BC-Anthem they will be. And since we have less than 50 emps, it will be too easy for it to just disappear and we get pointed to the Exchange as the only game left in town…

  11. And, of course, the REAL problem is that we AND the insurers are enriching the health care industry whose market has run completely amuck from stem to stern. It’s hidden from view, and fortified, and more profitable than if they were coining money in the basement. Ironically, everybody’s getting rich — except the docs!

    Trouble is, it’s so much more fun to heap abuse on Obama — especially when the obvious, and perhaps only solution is single payor.

    Have fun, fellas — but you’re barking up the wrong tree… read your Brill.

  13. Matty….you are missing the point that Anthem et.al. can charge whatever they want to, they can raise premiums at will in California because there are no statuatory limits to them doing so.
    How do you feel about that?

  14. It will undoubtedly take years to clearly see the benefits and losses that will result from the pending changes in the health insurance industry. As it stands, premiums have been rising for years with little to no real oversight or meaningful regulation. In addition, those without health insurance often avoid accessing medical care when less costly interventions might be enough, and end up with expensive hospitalizations and procedures when the progression of their condition forces them to an emergency room – those costs are passed on to the rest of us. I also think it in unconscionable that some people, especially children, are denied benefits due to pre-existing conditions.

    That said, this new plan will not be perfect, and some will undoubtedly pay more and may receive less. I’m fine if I am in that category, as we clearly need to move forward to a system where everyone is covered and has access to prevention as well as critical care.

  15. JRM – I’m not missing the point at all… NOTHING in Obamacare fixes that problem other than they won’t be competitive in Exchanges that, in many states, they don’t even want to participate in at all. The name of the bill “Affordable Care Act” is a crock at worst and an oxymoron at best…

  18. I always find it interesting how people are so sure about something that hasn’t even happened yet. Anyone that suggests they know how Obamacare will turn out is just fooling themselves. None of us know. All you can focus on are the facts. The facts are that healthcare costs have been rising at unsustainable levels for years now, well before Obama took office or Bush for that matter. This is a deep rooted long term problem that needs comprehensive solutions. More than any other area, this is what is bankrupted the US. The facts are that healthcare as a percentage of our GDP are higher than military spending or any other category for that matter, by a wide margin. The fact is that Republicans have not tried to do anything to keep these costs from continuing to rise. The fact is that Obamacare is at least an effort to do something. Will it be perfect? Of course not? Will it help? We should all hope so, because clearly the status quo wasn’t working. The definition of insanity is banging your head against the wall but expecting a different result. Anyone complaining about Obamacare seems to be wishing to go back to insanity because you don’t have any solutions you are proposing you are just piling on for recreation. As a previous poster mentioned, the US (and South Africa) are the only advanced nations without some form of socialized healthcare system. Clearly we need to go a lot further than Obamacare, but at least it is a step in the right direction. Instead of trying to kill it and criticize it, we should be trying to continue the conversation about how it can go further.

    I’d also like to point out that all of you that seem to be so sure Obamacare is going to be bad, please check back in if you are wrong and admit it. Show some humility. People are so willing to come out of the woodwork to be so sure about the future, but rarely come back and admit that just maybe they can’t predict the future.

  19. And I would encourage everyone to read the Time article previously mentioned on the healthcare system. It is truly an enlightening read.

    http://www.time.com/time/magazine/article/0,9171,2136867,00.html

    You will find yourself nodding your head as you read it, as so much of it rings true. Then, if you choose, read the links from Matty above, on a Forbes article that tries to pick it apart. Forbes of course is admittedly a pro-business publication, so you can’t fault it for trying to suggest that there’s nothing wrong with the healthcare system (what???) and we’re spending exactly what we should be on healthcare (?????). If your BS detector doesn’t go off when reading the Forbes column, perhaps you should have your batteries checked.

  20. Be careful what you wish for. The health exchanges will be patterned after Kaiser Health Plans and will all be HMO’s. I don’t think those who have had other coverage thru either their work or paying individual plans will be happy. But this is what the American public voted for and this is what they will get. It will be rationed socialized health care pure and simple. And, by the way, the exchanges are still in the works, nothing has been finalized or worked out yet – the government is still trying to figure them out!

  21. Louise, if you have inside information about how the exchanges will be patterned, please share that. Otherwise, how do you know how they will work or how people will feel about them? For those that have coverage through their work, in most cases, nothing will change. At least that is what has been widely communicated. The expectation, whether right or not is that for those with individual plans, the wider competition and regulation should help to at least keep costs from rising so rapidly, if not driving them down at some point. Can we please wait to actually see how things unfold instead of making predictions and causing concern in a situation where nobody really knows.

  22. And what is so bad about being patterned after Kaiser?? Was a member for 25 years- and since it no longer being offered at my husbands work we are stuck with Anthem/BlueCross… OMG- the most INEFFICIENT system I have ever seen- anyone who says this system “works” has got to be crazy. When EVERYTHING I have done involves, 20 phone calls, by at least three different people in order to get any kind of resolution on bills that make no sense- it only makes sense that the system is inefficient! The only thing that has been straightforward for me was my flu shot- no wait, even that took 45 minutes wait at the pharmacy to have them confirm it was actually covered…. Because I haven;t found a doctor I like, my health records are scattered across 10 different offices now. I have an elective surgery I have to schedule, but can’t until I know whether my out of pocket is going to be 5 10 or 20k…. No one can tell me. Dan is right our system needs to be blown up! Starting with something similar to UK health care would be perfect- basic care, then for those that fell like they want/need “better” care or more choices can pay for supplemental/private insurance if they can afford it. I just don’t understand why we say the word “socialized” and everyone freaks out. We don’t turn away emergency patients at hospitals because they don’t have health care, either we do, or we start treating them BEFORE it’s an emergency- it HAS to cost less than the inefficient system we have now! Bottom line, I’d LOVE to see the government contract with KAISER to provide health care efficiently-

  23. Thanks Louise, I totally agree with you on “socialized” healthcare. Or at a minimum, giving people a choice. Let socialized healthcare compete with the private sector and let’s see how it goes. Police services are socialized, so are fire departments, and public schools, so why shouldn’t healthcare be too? Not to mention that it already is for members of the US Congress, US veterans, and seniors. So why do so many people freak out when that is mentioned? And as for being patterned after Kaiser, I have no problem with that, just hadn’t heard that was going to be the case. I like the HMO model.

  24. Due to the excessive increase in my Anthem Blue Cross I switched to Humana at the start of 2013.
    I am quite happy with the money saved !

  25. Dan is correct. Years of health insurance premiums skyrocketing. Republicans sticking their heads in the sand and doing nothing – as long as the campaign contributions were flowing in from insurers.

    Finally, we have a chance to improve the cost of health insurance. Not a perfect system. Single payer would have been even better. Overhead costs in Medicare are drastically lower than private insurance companies.

    So, we will see how the Affordable Health Care Act plays out, and likely have to fine-tune it as we go along.

  26. You have your head in the sand if you think 1) premiums are going down with Obamacare and 2) that small businesses will keep providing insurance for their workers under this tyranny.

    I did NOT say that the current system was perfect…far from it…but Obamacare does NOTHING for controlling costs, NOTHING for the BS that is the “fee-for-service model” that hospitals mark up like crazy, and NOTHING to deal with the out of control malpractice insurance problem that causes some of the escalating costs. It had obvious flaws that could have been more easily fixed the following ways (YOU ASKED FOR IDEAS FROM A REPUBLICAN, HERE THEY ARE!)

    1) The Feds should only cover “catastrophic” injuries and resulting care plus ER services, as well as MediCare/MediCaid. This would radically lower private insurance costs if they do not have to assume the risk/payouts for debilitating injuries, accidents, ER in general (that undocumented aliens/uninsured use) etc…

    2) US Insurance companies by law should not be allowed to refuse coverage or have radical premiums due to “pre-existing conditions” not already covered by “catastrophic” cases in item 1.

    3) Malpractice Insurance (if the DR/hospital/etc is proven negligent) should be handled with set $$ ranges and caps for various settlements (pain & suffering & lost wages) and/or penalties by Feds. This will lower DR insurance considerably and provide a predictable recovery remedy for patients/lawyers. This lowers costs for all…

    4) With the above in place, everyone instead pays for much lower cost PRIVATE PPO/high deductable, Health Savings Account (HSA)-type insurance plan where lower monthly premiums are paid by employer or family and then a yearly deductable is placed in a pre-tax account ahead of costs that reduces the taxpayer’s Adjusted Gross Income (AGI) on their taxes…Whatever is needed for medical/dental that is not covered by Federal catastrophic/MediCare/MediCaid is paid out of that account (or out of pocket if so choosing) and then private insurance covers the rest while enforcing group rates for services like they have always done. Whatever isn’t spent out of that HSA account that year is rolled over to subsequent years tax free as a cushion and/or low risk investment in short term/liquid CDs or bonds. Interest in the account would be tax free… another incentive to judiciously use your health care dollars.

    Find a flaw in that above, and then you can talk intelligently with me about health care and the proper incentives to lower costs.

  27. Thanks for suggesting solutions, but unfortunately that is not how a democracy works. You can’t just make suggestions on a website and make it so. We’ve got to work with the system we have, no matter how dysfunctional. You state over and over again how certain you are of how things will fall out under Obamacare and now things are becoming clearer when you start using terms like “tyranny”. If you think you have solutions to fix the system, run for Congress, or contact your representatives, that is how the system works. But bashing a potential solution, before it has even been implemented, where no rational human being can possibly know what the outcome will be unless you can see the future and when there are no other solutions on the table, is just recreational complaining, and that just makes things worse because all it does is foster misinformation and fear. Try being part of the solution, not the problem. We could all use more of that.

  28. Wow, sure are a lot of folks mesmerized by their own political thought monitors. Once Health care reform is in place the uproar will quiet down. As long as the insurance companies continue to cut their own throats with their silly policies they endanger their obscene profit margins that you sheep for reasons unknown continue to support. Change is difficult for most things and the urge to resist change is strong.

  29. Will someone please provide a fact based report on the health care program legislators, retired legislators(even after one term), and the President have established for themselves?

    Also, in terms of budget, what is the actual annual pay- inclusive of all benefits- out for a retired(even after one term) legislator.

  30. Gee really.. thanks for the civics lesson… another broken system in many respects…especially in gerrymandered/single party California… BTW, I posted those very INDEPENDENTLY CREATED conservative suggestions on websites in 2009 (my Facebook included) with a lot of support for them…even from some liberal friends that still have open minds to logic and cause/effect… They had siply never thought of those options…hmmmm… If I had a better hair line, and the patience to deal with statist politicians that permeate the system, running for office would be an option.

    Dan – if open minded, please read Mark Levin’s “Liberty and Tyranny”… and you’ll know why I used that term.

  31. So what else should we expect from a Legislature filled with incompetents that have never run a business or met a payroll with anything but Other Peoples Money?

    When will the state, city and counties start recording their unfunded liabilities like they make the corner pizza stand do?

  32. Reflecting on a few comments made by others about us being in a “democracy” and “how things work”, I find I need to correct that inaccuracy. The civics lesson of the day is that we (the USA…not necessarily California in practice…but on paper) are technically a Constitutional Republic as founded and defined. It was certainly based on democratic principles, but not technically a “democracy” where simple majorities determine all laws/changes and lack the checks/balances that are designed to protect the Republic from any entity having too much power. However, with the abuse of Presidential Executive Orders (both parties), Federal regulatory departments created with almost unchecked lawmaking authority outside of Congress (EPA, etc), activist judges essentially making instead of interpreting laws by their judgement, lack of public disclosure on bills before Congress that get rammed through when one party has leverage, and a free press that is about 80% in the bag for one side of the aisle, those principles of the Republic are being ravaged…

    As for this topic of healthcare, I’ve said my complete piece on it and defend both its logic and predictable outcomes based on human/corporate/economic nature. Unfortunately, we will all be that proverbial frog in the pot of water on slowly increasing heat while waiting for this law to ultimately boil us…

  33. Really, Matty? Mark Levin? The master of the “straw man” argument. The man who truly believes, for example, that Reagan (his idol) only cut taxes? (Levin just ignores the several tax increases under Reagan.) Really? Levin is the source that you would point us to for political guidance? Give me a break.

  34. Dave – thought I’d check back on this topic and found your post about Levin. If you can reference an equal or better Constitutional scholar and expert than Mark Levin, and I will consider their point of view.

    It only took about 3 seconds in Google to show that YOUR claim that Levin says that Reagan didn’t raise taxes is a myth spread by detractors of both… Rather than “give you a break”, I’ll give you another lesson and a link!

    https://www.teapartypatriots.org/2013/03/mark-levin-explains-reagan-to-tea-party-patriots/

    …and maybe you should read the book…

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