Health Insurance Rate Watch: Comments on the Anthem Blue Cross Life and Health Insurance Company Proposal

CALPIRG Education Fund

Anthem Blue Cross Life and Health Insurance Company has proposed increasing rates on April 1, 2015 for a number of “grandfathered” health insurance plans.1 The average proposed rate increase for these plans is 8.7 percent, but for some customers the increase could be as high as 24.9 percent.2 The benefits offered by the plans would not change. Nearly 170,000 people obtain their health insurance through these 28 grandfathered plans. CALPIRG Education Fund reviewed Anthem’s initial filing, as well as supplemental information Anthem provided in response to questions from the California Department of Insurance (CDI). Our review found that Anthem failed to provide adequate justification for its proposed rate increase. We respectfully urge CDI to seek a complete and thorough justification from Anthem in order to make an objective appraisal of the proposal. If Anthem is unable to provide sufficient justification then the average rate change should be substantially lower than the one proposed.

Our concerns include the following: 

1. Anthem’s anticipated spending on administrative and non-medical costs is too high.

2. Anthem may be overestimating medical trend.

3. Anthem’s rate increase is more than three times the rate of medical cost inflation.

4. The proposed rate increase for 2015 is on top of multi-year, double-digit increases.

5. Anthem did not provide sufficient information regarding which policyholders will enjoy premium decreases or suffer the biggest increases.

Attached is our anlysis, which includes more detail on each of these concerns: