Santa Monica, CA – The California Department of Managed Health Care (DMHC) declared Anthem Blue Cross’s impending May 1 rate hike “unreasonable” for at least 120,000 Californians, but acknowledged that state law provides the agency no power “but to publicly express our disappointment that Anthem Blue Cross didn’t lower the rates as we requested.” As a result, policyholders will be forced to pay unreasonable premium increases that appear to range between 16% and 25% and include increases to the policy deductibles as well. Legislation passed by the California Assembly Health Committee Tuesday — AB 52 (Feuer) -- would allow both the DMHC and the California Department of Insurance (CDI) to regulate health insurance premiums and prohibit insurers from imposing excessive rate hikes such as the Blue Cross increase taking effect on Sunday.
“When a regulator finds that a rate hike is unreasonable but can’t do anything about it, we obviously need more regulation,” said Consumer Watchdog Executive Director Doug Heller. “If the only consumer protection is the ability of a regulator to be disappointed, then we have no protection at all.”
This confirmation that Blue Cross is imposing an unreasonable rate hike comes two days after Blue Cross parent company Wellpoint announced that its profits for the first quarter of 2011 were nearly $1 billion, up 6% over last year.
The reform legislation, AB 52, authorizes insurance regulators to review insurance company profits and overhead as well as company projections about future health care costs in order to determine whether or not to allow a rate increase to take effect. In 2014, federal law will require all Californians to purchase health insurance, making the oversight and regulation of insurance rates even more urgent.
The proposal has met with fierce resistance from insurance companies in Sacramento. Earlier this week, Assemblyman Richard Pan, a Democrat, and all the Republican members of the Assembly Health Committee sided with Blue Cross and insurers trying to block the health insurance reform law. Still, the majority of the committee sided with patients and passed the bill.
“Making massive profits while imposing massive rate hikes on California families and businesses is obscene. Defending a system that lets insurance companies get away with it is worse,” said Heller.
AB 52 is expected to be heard next in the Assembly Appropriations Committee on May 11.
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Consumer Watchdog is a non-partisan public interest organization with offices in Santa Monica, CA and Washington, D.C. For more information, visit is on the web at http://www.ConsumerWatchdog.org