California health insurers are proposing double-digit rate increases for hundreds of thousands of policyholders, drawing criticism that health insurers are padding their profits as the nation prepares to carry out the federal health care law.

Anthem Blue Cross, the state's largest for-profit health insurer, wants to raise rates an average of 17.5 percent for 744,000 members in February, with some Anthem policyholders seeing increases as high as 25 percent.

"Here we go again," said Bruce Trummel, 62, who just got notice from the insurer about a 24.6 percent increase. Trummel, a self-employed piano tuner from the small town of Aromas, which borders Monterey and San Benito counties, said this will be the second rate hike of the year from Anthem, totaling 45.6 percent. His premiums will jump from $423 to $616 per month if the new rates go through.

Other insurers are also proposing hikes.
Aetna is planning a nearly 19 percent raise in rates for about 69,000 members with individual policies in April, and Kaiser Permanente wants to raise rates by 8 percent for more than 220,000 members in January, according to filings with the state's two regulatory agencies, the Department of Insurance and the California Department of Managed Health Care.

Also in January, UnitedHealth Group has proposed 10 percent hikes for 11,000 policyholders.

State lacks authority
While health insurers must submit proposed rate increases to the state, regulators can review the filings for accuracy but lack the authority to reject them for being excessive.

In 2010, outrage at Anthem's proposed 39 percent rate increase helped propel passage of the federal health law.

The timing of these most recent filings prompted some critics to suggest health plans are trying to raise rates in advance of Jan. 1, 2014, when the major elements of the federal health law will go into effect. At that time, anyone without health insurance will be required to buy it and insurers won't be able to deny anyone with pre-existing health conditions.

Health insurers want to make sure their rates are high going into 2014 to account for the uncertainties in the law and to make sure they can make as much money as possible, said Jamie Court, president of Consumer Watchdog, a Santa Monica group behind a ballot initiative aimed for the November 2014 election to give the state insurance commissioner the power to approve or reject health insurance rate increases.

"This is a bit of the pre-emptive strike against the implementation of the federal health reform law," Court said.

Insurers defend hikes
Health insurers reject those claims.

Anthem officials said the company's rates reflect the increasing cost of medical care.

While the lagging economy may discourage people from seeking health services, Anthem said it also prompts healthy people to drop insurance to save money. The consequence is that many of those who remain insured tend to be sicker and use their insurance more.

"The rate increases in the individual market are not unique to Anthem, but rather represent an economic reality faced throughout the entire industry, indicating health care costs continue to escalate faster than the growth of premiums," said Anthem spokesman Darrel Ng.

Limits on insurers
The federal health law has already started requiring insurers to spend at least 80 percent of premium dollars in the individual or small-group market on medical care. The requirement to meet a minimum threshold, known as the "medical loss ratio," would limit the amount insurers spend on administrative and overhead costs.

"The law is clear that health premiums reflect the cost of medical care," said Patrick Johnston, chief executive officer of the California Association of Health Plans, which represents the state's health insurers. "So 2013 premiums reflect 2012 medical care, and if too much is collected, rebates go back to the consumers."

Still, California Insurance Commissioner Dave Jones said nothing prevents health insurers from setting those rates as high as they'd like.

"The medical loss ratio merely requires that a certain percent of the rate goes to cover medical care. It does not stop them from raising rates," Jones said.

Jones said he plans to review the rate requests carefully. In the past, such scrutiny, accompanied with widespread criticism, resulted in insurers pulling back or even withdrawing their proposed rate increase. For example, Blue Shield of California canceled a May 2011 hike for nearly 200,000 policyholders.

Trummel, grappling with his second increase of the year, isn't holding his breath. But he's hoping that the new state-run marketplace where people will be able to buy health insurance under the federal health law in 2014 will yield an option that offers him some relief until he qualifies for Medicare.

"If I could get into that (the marketplace), I might have only one more year of this agony with Anthem Blue Cross," Trummel said. "I'm just holding on until either the health law or Medicare will kick in."