Anthem Blue Cross will lower its rate hikes planned for July and will hold off on increases to co-payments and deductibles until 2012, according to an agreement announced Monday by the state Department of Insurance.

"This is good news for 600,000 policyholders," State Insurance Commissioner Dave Jones said Monday, adding that the decision means consumers "can continue to afford coverage instead of having to give it up."

Jones estimated Anthem Blue Cross ratepayers will save at least $40 million as a result of the Monday decision.

Members of Anthem Blue Cross, the state's largest health insurer, will see the average premium go up by 9.1 percent starting July 1.

Anthem had originally sought a 9.8 percent increase in its request filed with the state late last year, citing the rising cost of providing coverage to those who pay for their own insurance.

Anthem will also delay rate increases for some co-payments and deductibles until Jan. 1, 2012, instead of putting them into effect in July.

In a statement, Anthem president Pam Kehaly said she was pleased with the resolution, but that more must be done to "control the unrelenting rise of underlying health care costs. We plan to be an active participant in helping forge that dialogue."

Anthem Blue Cross said it lost $110 million last year in covering people who purchase their own policies and expects to lose millions more in 2011.

Anthem is California's second major health insurer to withdraw or reduce proposed rate increases in recent days.

Last week, San Francisco-based Blue Shield dropped its plan to increase premiums in 2011. The proposed hike would have been Blue Shield's third since last October and would have meant an 87 percent increase for some Blue Shield policyholders, according to Jones' office.

Anthem and the state's three other major health insurers – Aetna, Pacificare and Blue Shield – agreed in February to a 60-day stay in order to give Jones' office a chance to review their requests for premium increases. Rate hikes by Aetna and Pacificare are still under review, Jones said.

Jones' office said Anthem's proposed premium increase for July was actually 16.4 percent, if factoring in increases to co-payments and deductibles.

Anthem officials said they did not factor in co-payment and deductible costs because they were never implemented and because customers can select different plan options to offset any rate increases.

However the numbers are crunched, some consumer advocates say Anthem's decision to lower its proposed premium hike and to defer increases in co-payments and deductibles is a victory.

Though the insurance commissioner's office has no power to reject rates it deems excessive, advocates say the review process helped influence the recent decisions by Blue Shield and Anthem.

Anthem's decision came on the eve of today's anniversary of the federal Affordable Care Act, which allows states to review proposed health insurance rate hikes.

"Ratepayers need relief in tough economic times," said Anthony Wright, executive director of Sacramento-based Health Access California. "Literally one year to the day of the Affordable Care Act, it's having an impact. It's not reducing rates, but it's reducing the astronomical (pace of) growth."

Monday's news also drew Washington's attention.

In a statement, Health and Human Service Secretary Kathleen Sebelius called the California announcement "another example of how increased transparency and oversight benefit consumers."

But even though Anthem has lowered its proposed rate hike, Doug Heller, executive director of Consumer Watchdog, said it will still cause pain for hundreds of thousands of ratepayers.

"It's still a huge rate hike for anybody trying to manage their checkbook." Heller said. "The roller coaster ride that insurers are taking Californians on has to stop."

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Contact The Bee's Darrell Smith at (916) 321-1040 or [email protected]