Mary Feller’s family spends nearly $25,000 a year on health insurance premiums, which is more than they pay for the mortgage on their Santa Venetia home.
"I think for the first time we’re really scared that we’re going to be without health insurance," said Feller, who said she is especially worried for her 26-year-old daughter, diagnosed with malignant melanoma now in remission. Her daughter’s premium has tripled in four years.
"We would never ever go without health insurance," she said. "It’s like playing Russian roulette."
That’s why she decided to become a plaintiff in a lawsuit against California’s largest for-profit health insurer on behalf of policyholders who were allegedly pushed to take coverage with fewer benefits and higher deductibles.
In a lawsuit filed in Ventura Superior Court on Monday, Anthem Blue Cross is accused of violating a California law requiring health insurers to offer new, comparable coverage or minimize premium increases when they close a policy.
According to the lawsuit, plaintiffs Feller and Randy Freed of Goleta received similar form letters from the Woodland Hills-based insurer, stating their policies were closed and they could "switch to any Anthem Blue Cross individual health plan with no underwriting required."
The lawsuit alleges that the few plans Anthem would allow Feller and Freed to switch into had higher premiums, higher deductibles, less coverage, or a combination of those undesirable traits.
Anthem Blue Cross spokeswoman Peggy Hinz said the insurer hasn’t yet reviewed the lawsuit, declining further comment.
The lawsuit seeks class action status and is being brought by Consumer Watchdog, a Santa Monica-based consumer advocacy group, on behalf of Feller and Freed.
When the practice was outlawed in 1993, legislative analysts called it a "death spiral" because rates inevitably increased until policyholders could no longer afford coverage. As the coverage pool shrank over time, rates went up.
"It’s a very profitable practice, and what we know is the insurance industry is very focused on short-term returns," said Jerry Flanagan, a health advocate for Consumer Watchdog.
The lawsuit comes on the heels of government scrutiny of a steep Anthem Blue Cross rate hike for roughly 700,000 individual policyholders in California. The hikes average 25 percent – some premiums will rise as much as 39 percent – but
implementation of the hike has been delayed until May 1 while a state regulator investigates.
Anthem executives have blamed the current economic climate, flaws in the national health-care system, high costs of health care and fewer young, healthy people holding onto insurance policies for the rate hikes.
The Obama administration has called Anthem’s hike a harbinger of rising premiums in its arguments for health-care reform.
In special hearings last week, California legislators and the U.S. House of Representatives questioned executives from WellPoint, Anthem’s parent company, about proposed premium hikes in California, Maine and elsewhere.
Feller, a freelance writer who lives in Santa Venetia with her self-employed husband, Gordon, said it would seem recipients need to be in nearly perfect health to ensure coverage.
"We’re in good health but we can’t even make it through the underwriting guidelines because we use a couple of non-generic medicines," she said, explaining that she suffers from migraines and her husband has mild asthma.
"They don’t realize it, but every American family in this country, unless they are very wealthy and don’t need insurance, are one major illness away from bankruptcy," Feller said.
The lawsuit, she believes, will make a difference.
"I think what Blue Cross did was illegal and unfair and I think we’re putting Blue Cross on notice," she said. "What they are doing is completely unacceptable."
Read more San Rafael stories at the IJ’s San Rafael section.
IJ reporter Jennifer Upshaw Swartz contributed to this report.