As California consumers prepare for health insurance rate hikes to take effect on Friday, a consumer watchdog group wants to remind them of a ballot initiative that would give the state the authority to publicly review health insurance rate increases and reject those that are excessive.
Consumer Watchdog's reminder comes as 730,000 Californians who carry Anthem Blue Cross insurance will see their rates increase by up to 26 percent. The nonprofit consumer education and advocacy organization has singled out Anthem Blue Cross.
"For the second time in less than a year, Anthem Blue Cross has imposed outrageous double-digit rate hikes on hundreds of thousands of Californians," said Carmen Balber, executive director at Consumer Watchdog, in a news release. "California is one of the few states where we don't have the power to protect consumers from unjustified and excessive rate hikes."
Anthem's parent company, Wellpoint, announced a 38% profit increase in the 4th quarter of 2012 over the previous year, and $2.7 billion in net profits for 2012.
Consumer Watchdog isn't the only one who has singled out Anthem's rate hikes. Anthem and Health Insurance Co. came under harsh criticism in early January from state Insurance Commissioner Dave Jones, who accused the companies of slapping unreasonable rate increases on more than 250,000 small-business policyholders, according to published news reports.
Anthem Blue Cross spokesman Darrel Ng said the rate hikes are not exclusive to Anthem Blue Cross. He said federal healthcare reform has required all health insurance carriers to spend 80 cents per dollar on healthcare premiums. He attributes the rate hikes to Increased medical costs and an aging membership pool that is using more services while younger, healthier members are dropping their insurance due to the increased costs.
"The rate increases in the individual market are not unique to Anthem Blue Cross, but represent an economic reality faced by the entire healthcare industry," Ng said. "Healthcare costs continue to increase faster than the state's economy, and our rate change is consistent with our competitors."
He said two of Anthem's competitors have increased their rates by 12 and 18 percent, and Anthem is right on line with an average rate increase of 17.5 percent, with the 26 percent cited by the consumer watchdog organization being the high end of the spectrum.
While insurance reform law in California regulates auto, home and business insurance rates, the law, passed in 1988, does not extend to health insurance carriers. The 2014 ballot measure would apply the same rules to health insurance companies.