Comments on the Anthem Blue Cross Proposal to Raise Health Insurance Rates

CALPIRG Education Fund

Anthem Blue Cross has proposed rate increases as high as 24.9% for policyholders in their “grandfathered” health insurance plans that were established before the Affordable Care Act was signed into law. The rate changes average out to a 16 percent increase for 153,000 policyholders, impacting a total of 238,000 Californians currently covered under the plans. These plans are closed to new enrollees and do not have to meet many of the coverage requirements of the Affordable Care Act.

As part of our analysis, 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 this rate increase. We respectfully urge CDI to amend the filing to provide this justification. The lack of sufficient information is especially concerning because the rate increase is so high and affects so many Californians.

Key Findings:

o The suggested average rate change of 16.4% is more than six times the cost of medical care inflation index, as calculated by the federal government.

o Anthem’s projected medical trend appears to be overstated.

o Broad assumptions in Anthem’s actuarial models may leave some consumers paying more than they should.

o Anthem has not adequately explained its projection for high administrative costs for these plans, which are closed to new enrollees.

The California Department of Insurance should demand 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 they are proposing.