Anthem Blue Cross cites miscalculations, backs down on 39 percent rate hikes

After months of public scorn and outrage from state and federal lawmakers over its planned increase in heath insurance premiums beginning May 1, 2010, Anthem Blue Cross has withdrawn its plan for its massive health insurance rate increases.  It is claiming that it made “inadvertent miscalculations” when it calculated medical costs, which led to its proposed increase.

Yet, the announcement came shortly after the California Department of Insurance let Anthem Blue Cross know that its review of the proposed rate hike revealed “substantial errors “ that were out of sync with medical inflation.  In fact, according to Insurance Commissioner and Gubernatorial candidate Steve Poizner, the outside actuary he hired found that substantial mistakes would have led to massive and unjustified rate increases, and that after notifying Anthem of these errors, they admitted to the mistakes.

Anthem Blue Cross claims it will re-file for rate changes next month and promised to reflect updated medical cost.

In January of 2010, Anthem informed its 800,000 individuals who buy coverage on their own to expect rate increases of nearly 39 percent compared to last year.  This announcement is what fueled the re-ignition of the health care debate in Washington, eventually leading to sweeping health insurance reform from the federal government. 

Senator Dianne Feinstein (D-CA) has authored legislation that would give the federal government the power to reject unjustified rate increases and called on WellPoint, Anthem’s parent, to permanently scrap the hikes. California legislators are also considering a bill that would extend the rate review process now in place for car and property insurance to health insurance. 

Whether or not Anthem is telling truth, Anthem’s health insurance policy owners in California have at least two additional months prior to any proposed rate increases.

Let’s hope Anthem’s re-submission to request revised rate changes truly reflects the market rate.