On Tuesday, Anthem Blue Cross of California executives told members of the Assembly Health Committee that the company intends to go ahead with proposed premium increases of up to 39% for as many as 800,000 individual policyholders in California, the Los Angeles Times reports.
The rate hikes originally were scheduled to take effect on March 1, but Anthem delayed them until May 1 while the state conducts an investigation.
The California Department of Insurance will permit the premium increases to go forward only if independent actuaries confirm that Anthem has complied with state law requiring insurers to spend at least 70% of premiums on medical claims (Helfand, Los Angeles Times, 2/24).
Anthem Defends Hikes
During the hearing, Anthem President Leslie Margolin and James Oatman -- leader of the consumer division at Anthem's parent company, WellPoint -- defended the rate hikes (Colliver, San Francisco Chronicle, 2/24).
Margolin said Anthem opted to raise premiums because the economic downturn spurred healthier, younger people to cancel their policies, resulting in a generally older, less healthy coverage pool (Hindery, AP/San Jose Mercury News, 2/23).
Oatman told the committee that he expects about 15% of Anthem's roughly 800,000 individual policyholders to discontinue their coverage because of the premium increases (Calvan, Sacramento Bee, 2/24).
Members of the health committee also questioned the executives about Anthem's financial status, noting that the subsidiary has continued to generate profit for WellPoint.
Oatman and Margolin said Anthem's profit margins were 2.5% to 5%, which aligned with profit of other insurance companies (Los Angeles Times, 2/24).
Greater Regulation Proposed
During the hearing, committee chair Dave Jones (D-Sacramento) suggested that lawmakers expand California's ability to regulate premiums for health insurance in the same way that it regulates rates for other types of insurance (Herdt, Ventura County Star, 2/23).
On Tuesday, Capital Public Radio's "KXJZ News" reported on the health committee hearing. The segment includes comments from:
- Jones; and
- Margolin (Russ, "KXJZ News," Capital Public Radio, 2/23).