Insurance Blues: Anthem rate hike rejected
Anthem filed its rate request Nov. 1 and wanted to raise the rates on 48,000 customers buying coverage under several plans, including Direct Pay BlueCare HMO, Century Preferred, Lumenos and Tonic. These are plans purchased typically by small businesses and individual consultants.
The filing drew heated objections from consumer advocates, politicians and customers in the state.
On Friday, acting Insurance Department Commissioner Barbara Spear ruled the request "is excessive and is disapproved in accordance with state statute. She also said the current premium rates are adequate. She accepted the recommendations of Hearing Officer Mark Franklin, who presided over the hearing on the matter.
Anthem spokeswoman Sarah Yeager said the company was still reviewing the ruling.
"As we review the order, it is important to note that we understand and share strongly the concerns of our members over the rising cost and rate of utilization of health care services and the corresponding adverse impact on insurance premiums," she said. "The increasing demand for medical services, including the use of new, expensive prescription drugs, and demand for advanced technologies are driving up the cost of health care at an unprecedented rate. Anthem remains committed to our individual market segment customers and to finding ways to manage health care costs." During the hearings, one concerned resident indicated concern that Anthem would leave the market without more compensation, but many more complained they would not be able to afford the increase.
The department's decision hinged largely on an inhouse actuarial analysis of Anthem's 12.5 percent projected increase in claims, which found that it should have been 4.1 percent.
Spear's ruling was lauded by a nearly incredulous Attorney General Richard Blumenthal.
"This rate hike rejection is virtually unprecedented -- a flat total denial. This decision is a timely holiday gift for policyholders struggling with unemployment and a stalled economy," Blumenthal said. "The new commissioner apparently tossed the rubber stamp. This decision hopefully marks the dawn of a new era for the Insurance Department, real scrutiny and service to consumers. The department did what it's supposed to do, but often has not: Set rates based on facts." Spear replaced Thomas R. Sullivan, who resigned from the post amid a chorus of criticism that his department was too quick to side with insurers. In fact, under Sullivan, the department received a $1 million federal grant to combat unreasonable rate hikes. Though Sullivan accepted the grant his department denied that it had ever allowed an unreasonable rate hike despite a recent run of double-digit raises.