Some are doubly affected as policyholders and health care providers.
By Jimy Tallal / Special to The Malibu Times
Among the 700,000 individuals throughout the state of California who received letters from Anthem Blue Cross in January giving them a one-month notice of rate hikes in individual health insurance premiums of up to 39 percent (according to an estimate by B. W. Baker Insurance Service, Inc.), there are hundreds, and possibly thousands, of Malibu residents.
A higher proportion of local residents have been hit with the increases than most communities because many are self-employed or work for small companies without health insurance.
Rob Nelson, health care insurance specialist with B. W. Baker Insurance in Malibu, said he’s met with “at least a hundred [local customers] either on the telephone or in person” following the announcement of the rate hikes. Most are exploring their options both within Anthem and outside. “It’s at point break now for a lot of customers,” he said.
Following Anthem’s notice of rate hikes, AB 2578, which requires health insurers to submit all rate changes for approval to the state Department of Insurance or Department of Managed Health care, passed the state’s Assembly Health Committee on March 23, putting California on the same path as 27 other states that already have “prior approval” requirements. Many lines of insurance, including auto insurance, are already required by law to apply for state approval of rate increases.
The Santa Monica-based nonprofit Consumer Watchdog group testified that this bill will “fill a gaping loophole in the federal health reform legislation.” The “Patient Protection and Affordable Care Act” doesn’t control health insurance rates, but does give states the money to develop their own insurance regulations.
Consumer Watchdog filed a complicated class-action lawsuit in Ventura County Superior Court on March 1 against Anthem Blue Cross. On March 18, they then called on state Insurance Commissioner Steve Poizner to release all documents related to his investigation of the Anthem rate increase and hold public hearings across the state in an effort to make the process more transparent.
Anthem Blue Cross, in a recent statement provided by local public relations director Peggy Hinz, continues to justify its increase on the rising cost of health care services in California’s individual market. “The pricing structure of our individual products is a reflection of the medical risks and cost associated with this market. As cost of care increases, premiums rise accordingly.”
The recently passed national health care bill will not affect health insurance policies that were continuously in place before the legislation was enacted.
Meanwhile, some local residents are taking action in protest of the rate hikes.
Malibu Realtor David Carter said his premiums increased $350 a month, from $870 to $1,240.
“It was ridiculous,” Carter said. “I cancelled it and went with somebody else.”
Malibu resident Sam Seelig, M.D., sees the problem from two perspectives-as both a policyholder and a provider for Anthem Blue Cross. When he received notice of a 39 percent premium increase in his personal policy, he was “outraged.” Seelig said he is getting squeezed by Anthem Blue Cross professionally as well, as they continue to “ratchet down the amounts they reimburse physicians and hospitals.” He said, “This isn’t a health care crisis; it’s a health care insurance crisis.”
Nelson said his agency was blindsided by the price increase as much as the policyholders, with no advance warning, adding that Anthem Blue Cross’s actions have a major effect on consumers because “it’s the largest health insurance organization in California with the largest market share.”
Although the rate hikes were originally scheduled to go into effect March 1, state Insurance Commissioner Steve Poizner requested a delay until May 1, pending review by an independent actuary to ensure that at least 70 percent of premium dollars were spent on medical care as state law requires. Poizner announced on Feb. 22 that a yearlong investigation by his office found that Anthem Blue Cross committed 732 violations of state law from 2006-2009. An administrative judge will decide whether each allegation is legitimate.
Anthem Blue Cross’s parent company, WellPoint, Inc., also became the focus of national attention for instituting double-digit premium increases at a time when national health care reform is at the forefront. Executives were put on the hot seat at a hearing of the Subcommittee on Oversight and Investigations cochaired by Rep. Henry Waxman on Feb. 24. Based on 3,000 documents submitted, it appears that WellPoint allegedly increased premiums in order to raise target profits in California from 5 percent to 7 percent; and purposely padded rate increases to include “concessions” to state regulators later. Documents also suggest WellPoint hopes to move consumers into less generous plans, especially regarding maternity coverage and higher deductibles, by creating “downgrade options”-look-alike plans with a benefit or two removed.
Angela Braly, President and CEO of WellPoint, Inc., stated in testimony that in a difficult economy, younger (healthier) policyholders leave the plan as they lose their jobs and income, leaving the older and less healthy. This “adverse selection process” was said to account for a quarter of the rate increases. She said the rate increases at Anthem are actuarially supported.
The Los Angeles Times reported that Anthem transferred $3 billion to its parent company between 2007 and 2009, and that WellPoint accumulated more than $2.7 billion in profits in the last quarter of 2009 alone.