Making his case yet again for regulatory authority to reject "excessive" rates, California Insurance Commissioner Dave Jones on Tuesday singled out Anthem Blue Cross Life and Health Insurance Co. for slapping "unreasonable" rate increases on more than 250,000 small-business policyholders.
Anthem fired back, saying the insurance commissioner's math and methodology were flawed.
It was the latest skirmish amid a national battle as health insurance companies seek double-digit percentage rate increases, citing increasing costs even as they scramble to come to terms with the federal Affordable Care Act. In return, consumer advocates contend insurers are raking in large profits.
During his Tuesday press conference, Jones said Anthem small-business policyholders in California will see an average annual increase of 10.6 percent under a rate that went into effect Jan. 1. Over two years, Jones said, the average increase will be 19.5 percent.
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Jones said Anthem proceeded with the increase despite evidence of a "21 percent return on equity" and his personal appeal to Anthem to hold the line. He said Anthem was determined to go ahead "while small businesses are struggling to keep their doors open."
Anthem spokesman Darrel Ng said the insurer "strongly disagrees" with Jones' assertions.
Ng said the average rate increase for 52,400 members is actually 6.5 percent. Including benefit changes, the increase is about 7.5 percent, with an average increase of 12.1 percent over 24 months.
Ng said the California Department of Insurance apparently lumped varying policies into one pool to reach an overblown figure. He also said profit on the portion of Anthem's Small Group business regulated by California in 2012 is projected to be 1.2 percent.
Jones also called for Anthem and other in-state insurers not to charge fees in 2013 that they are not obligated to pay under Affordable Care Act provisions until 2014. Jones said he believes collecting fees in 2013 is "unlawful" and indicated that he is considering possible legal options if such fees are collected this year.
Ng disputed that as well, saying Anthem and other insurers (in California and other states) do business that overlaps both 2013 and 2014, and that customers are paying costs only associated with 2014, under the federal guidelines.
At the heart of the issue, Ng said, is the "economic reality faced throughout the entire industry as health care costs continue to escalate faster than our state's economy as a whole."
For Jones, the issue is his lack of regulatory authority to reject rate increases he considers excessive. Insurance commissioners in 37 other states have that authority, or the power to roll back rates.
A measure that has qualified for the November 2014 state ballot – with Jones' backing – would give the state insurance commissioner that authority. As a state lawmaker, Jones made unsuccessful attempts to give the insurance commissioner rate-regulating authority.
As things are now, Jones said, insurers are free "to set whatever rates they want and that's what they do."
Even though the Obama administration's goal was to curb health insurance rates nationwide, insurers are seeking double-digit percentage rate increases, citing an aging population and other factors driving up costs. Analysts said small businesses are particularly vulnerable to higher rates.
The California Association of Health Plans has continually cited rising health plan costs associated with care received by uninsured consumers and less-than-adequate government reimbursements for Medi-Cal and Medicare patients.
Still, consumer advocates weighed in Tuesday, saying that some form of rate control was needed.
"Health insurance rates have risen five times greater than the rate of inflation over the last decade, by 153 percent," said Jamie Court, president of Consumer Watchdog. "It's outrageous that California, unlike most other states, can't protect patients from unreasonable health insurance rate hikes."