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Anthem eases up on insurance rate hikes after state’s scrutiny

By in Press Enterprise on October 13, 2017

By California Healthline

By Chad Terhune, California Healthline

Insurance giant Anthem Blue Cross agreed to reduce two planned premium increases for 2018 after California regulators questioned the company’s rationale for raising rates by as much as it had initially proposed.

The scaled-back rate hikes, in the individual and small-employer markets, will reduce premiums by $114 million, state officials said.

The California Department of Managed Health Care challenged Anthem’s estimates for future medical costs, in particular its prediction of a 30 percent jump in pharmacy expenses for the individual market — nearly double the estimates of two other big insurers and out of line with industry trends nationally.

As a result of the department’s intervention, the nation’s second-largest health insurer shaved 3 percentage points off its 2018 rate increase for individuals and families, still leaving a hike of 37.3 percent. That increase is the second-highest — after Molina Healthcare — among the 11 insurers that sell in the Covered California exchange. Anthem also cut its rate hike on small businesses by more than half, to 2.5 percent.

The smaller premium hikes are expected to save individuals about $21 million and small-business customers an estimated $93 million.

California’s two insurance regulators, the Department of Managed Health Care and an elected insurance commissioner, can pressure companies to reduce their rates, but neither has the authority to block rate hikes.

Shelley Rouillard, director of the managed care agency, said her department carefully scrutinizes rate filings to ensure “consumers are receiving value for their premium dollar. … Rate review is an important consumer protection and holds plans accountable to justify their rate increases.”

Anthem said in a statement that it works with regulators routinely “to revisit our assumptions and rates as more data becomes available … We are pleased that the emerging data allowed us to provide some rate relief to California individuals and small businesses […]    

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