Commissioner Complains About Blue Cross Rate Increase

Anthem Blue Cross is imposing a 9.8% premium increase on its small group health insurance policies. Insurance Commissioner Dave Jones is calling the increase unreasonable. “This…is the fourth consecutive rate increase by Anthem on small employers that the Department of Insurance found excessive and unreasonable. Over the last 24 months Anthem has raised rates on members in these small group policies an average of 24.9%. The Department of Insurance’s finding that Anthem’s rate increase is unreasonable is based on Anthem’s excessive return on equity or profits, its excessive pre-tax pricing margin, its unjustified high-pricing trend of 8.6 percent, which includes a prescription drug trend of 21.4%, and its failure to adjust the rate for the better health status of its remaining members. Also, last year, Anthem shifted $75.5 million of income to a premium deficiency reserve. This accounting maneuver was unwarranted and unjustified and decreased Anthem’s reported net income for 2013 and masked the fact that the company’s profit was over 20%. In five out of the last six years Anthem has attained a greater than 20% profit,” Jones said.