Anthem Blue Cross has, once again, failed to justify a rate increase on consumers, overcharging policyholders $33 million that California’s Insurance Commissioner should have the power to reject.
Anthem has imposed an average 8.7 percent premium increase on consumers with individual grandfathered health insurance policies. $33 million of the rate hike that will fall on nearly 170,000 consumers with individual grandfathered plans is unreasonable, according to an actuarial analysis by the Department of Insurance.
Since 2013, Anthem has imposed $145 million in rate hikes deemed by regulators to be unjustified. Anthem spent $18.7 million of the $56 million insurance companies kicked in to defeat Proposition 45, which would have regulated health insurance rates the way that auto, home and business rates are in California.
Anthem Blue Cross policyholder Josh Libresco of San Rafael has already been a victim of the health plan’s unreasonable rate hikes.
“I received a notice from Anthem Blue Cross that they plan to raise my health insurance premium again,” said Libresco. “My rate as a member of a family of four, with an individual policy, will go up 8.4 percent, to $2,313.00 per month. Yes, that is $27,756 per year.”
Consumer Watchdog last year saved home and auto insurance policyholders $127 million in premium hikes that would have taken effect if not for its rate challenges, which are barred for health insurance companies.
“These health insurance rip-offs will continue until the Department of Insurance is able to regulate health insurance rates the way auto and home insurance rates are,” said Jamie Court, president of Consumer Watchdog. “Anthem has already paid itself back with interest for the millions it spent against Prop 45.”
Prop 45 would have allowed the state’s elected insurance commissioner to make health insurance companies justify their rate hikes under penalty of perjury, and to reject excessive rate increases. 35 other states have already enacted such laws, but not California.
Based on an independent analysis, Insurance Commissioner Dave Jones requested Anthem lower the rate increase, but it refused. The April 1, 2015 rate increase imposed 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.
Insurance reform Proposition 103 passed in 1988 and required auto, home and small business insurance companies to justify their rates before they took effect; barred insurance companies from unlawful underwriting practices; repealed the industry’s exemption from the antitrust, civil rights and consumer protection laws; and gave consumers the right to challenge unfair and excessive insurance rates. Prop. 45 would have extended these protections to the health insurance industry.
Prop. 103 has saved motorists over $100 billion since it took effect, according to a study by the Consumer Federation of America. California’s the only state in the nation where the average auto insurance bill is lower today than it was when 103 passed.
Savings from Consumer Watchdog challenges to unjustified auto and homeowners insurance rate increases in 2014 are listed in the chart below:
Company Proposed Rate Approved Rate Savings
State Farm (homeowners) 6.9% -1.2% $86 million
USAA (homeowners) 0% -13.6% $40.5 million
Low Cost Auto Ins. Program 7.5% 2.2% $140,000
CSAA (tenants) 6.9% 3% $818,000
