About 122,000 Californians covered by Anthem Blue Cross would get protection from dramatic rises in health insurance premiums or have a chance to join new plans despite pre-existing health conditions, according to a settlement of a class-action lawsuit filed last year in Ventura County Superior Court.
Announced Tuesday, the settlement still must win final court approval. It would affect people in individual health insurance policies that were closed more than a year ago to new members, meaning costs were spread across a fixed or shrinking pool.
Plaintiffs alleged Anthem Blue Cross closed the policies without providing protections required by the state, instead trapping people with pre-existing conditions into plans in which premiums rise dramatically. They said often the only alternative was to drop insurance or join high-deductible plans that offer much less coverage.
Anthem officials said they agreed to the settlement but were not admitting to violations of law.
"This settlement admits no wrong doing," company leaders said in a statement. "… Anthem will provide all settlement class members the opportunities to switch to a new (Anthem) health plan or policy regardless of their health condition or health history."
People in four PPO plans that were closed to new members in September 2009 also can stay with their current coverage. Premium increases in the plans will be limited in a formula designed to eliminate what lawyer Jerry Flanagan of the Consumer Watchdog advocacy group called a death spiral.
"When you close a policy, new younger people can't join," he said, noting that the pool of covered people can shrink to only those who worry that pre-existing conditions prevent them from getting coverage elsewhere. "The people who are left are those that can't leave. … As the policy group gets smaller and smaller, the rates spiral up. That's what they call the death spiral."
The lawsuit was filed on behalf of policy holders by Consumer Watchdog and several law groups. It was filed in Ventura County because the insurance company maintains a presence in Thousand Oaks, though it is based in Woodland Hills.
Donna Freed's husband, Randy, is one of the lead plaintiffs in the case.
Donna Freed, who lives in Goleta, said the settlement will give new choices to people who feel trapped.
"They can't just keep people in policies and close them as they get older and raise their rates so high that they can't afford it," she said of insurers. "The message is Anthem has to give people options."
Tuesday's news of a settlement agreement had other people trying to figure out whether they'll receive the letters being sent out to people affected by the pact.
"I hope it means that these increases will come down," said Brad Lunetta, a Ventura real estate appraiser who pays $798 a month in premiums to cover his family of four. "I still expect increases. I just hope they will be less."
Anthem Blue Cross officials offered no comment except for a written statement that focused on details of the agreement. Flanagan praised the insurer for coming to a settlement rather than fighting the lawsuit in a court battle that could last years.
The settlement has been preliminarily approved by Ventura County Superior Court Judge Frederick Bysshe and is scheduled for a final approval hearing Aug. 26.
On the Net: http://fellerbluecrosssettlement.com/