It’s become an annual ritual for Folsom insurance broker Dina
Collins, delivering the news to clients that they will have to dig
deeper into their pockets if they want the ease of mind that health
insurance brings. This year the news was particularly harsh.
"I’ve been in business for 20 years, and I’ve never seen anything like this. I thought it was scary," Collins said.
While intense scrutiny is being focused on Anthem Blue Cross for
proposing rate hikes of up to 39 percent on hundreds of thousands of
Californians who buy insurance on their own, other insurers are
delivering some equally jolting rate increases.
Last month, one of Collins’ clients received a disheartening notice
from her insurer, Health Net: a 37 percent increase, from $394 monthly
to $538, that further strains her ability to afford coverage.
Blue Shield subscribers have also been jolted by dramatic increases. In
the San Francisco Bay Area, some small business owners complain of
increases exceeding 75 percent. One Portola Valley business owner
reported seeing premiums for two of his employees jump from $622 a
month to $1,093 for a plan with an $1,800 deductible.
"It’s been across the board," said Collins. "It’s not only Blue Cross. It’s everybody.
A Political Firestorm
But it’s the Anthem Blue Cross hikes that have drawn increasingly
critical attention. The scrutiny boiled over last week as legislative
hearings were launched, candidates jockeyed for political advantage and
legal paperwork started flying.
Anthem Blue Cross President Leslie Margolin was grilled by a state
Assembly committee Feb 23. Particularly harsh was Assemblyman Dave
Jones, D-Sacramento, who wants to be insurance commissioner.
Angela Braly, president and CEO of WellPoint, Anthem’s parent company,
got the same treatment Wednesday from a congressional panel in
Washington, D.C., where the Anthem hikes have become a talking point in
the national debate over health care.
On Thursday, the Assembly subpoenaed Anthem Blue Cross records, seeking
information about executive compensation and internal discussions on
raising rates.
The same day, state Attorney General Jerry Brown, who is to announce
his candidacy for governor today, issued subpoenas not only to Anthem,
but to the other six largest health insurers in California: Aetna
Health, CIGNA, Health Net, Blue Shield of California, Kaiser Permanente
and PacifiCare. Brown cited concerns that the companies were "unjustly
raising rates and denying payment of legitimate claims."
On Monday, Consumer Watchdog filed a lawsuit seeking class-action
status against Anthem Blue Cross, alleging that the insurer is forcing
subscribers into a coverage "death spiral." The suit, filed in Ventura
Superior Court, accuses Blue Cross of hiking premiums to force
subscribers from benefit-rich policies to less expensive coverage with
fewer benefits and higher deductibles.
The scrutiny has been welcomed by many, including consumer health care advocacy groups.
"Regulators need to be taking a hard look at what’s behind these
increases. Consumers need to know," said Michael Russo, a health care
advocate and staff attorney for the California Public Interest Research
Group. "When they say, ‘Trust us. We’re doing everything to keep
premiums down,’ it’s really hard to take them at face value."
But while critics sternly wag fingers at insurers, the companies point elsewhere.
Anthem Blue Cross President Margolin argued the point during two hours
of testimony Tuesday before a mostly skeptical Assembly Health
Committee. "The more time and energy we devote to looking for someone
to blame, the more acute will become the problems we need so
desperately to address," she said.
Patrick Johnston, president of the California Association of Health
Plans, said, "It’s inevitable that health plans and other organizations
in the field are going to be subject to scrutiny. But it makes sense to
examine what drives the cost of health care."
Hospitals and doctors are demanding more money for their services
because of expensive new technologies and pharmaceuticals. Hospitals
are passing on the cost of treating the uninsured to those with
insurance. Worried about malpractice lawsuits, doctors are ordering
more bill-swelling tests.
Such costs eventually are passed on to ratepayers, Johnston said.
Insurers Stingy On Details
But insurance companies’ unwillingness to disclose information about
profits and other financial data or details about the rate-setting
process has heightened skepticism that the increases are justified.
"Part of what we don’t know is how they reach different premium hikes
for different people. Why is it higher for one person? How are they
slicing and dicing?" said Beth Capell, a program manager for Health
Access California.
Two state agencies regulate health insurance companies doing business
in California – the Department of Managed Health Care, which mostly
monitors health maintenance organizations, and the Department of
Insurance, which also has oversight of automobile and property
insurance.
But state regulators have no pre-approval authority over health
insurance rates, unlike premiums for vehicle and property insurance.
Insurance companies must file rate information with the Insurance
Department, but most of the information is considered confidential,
according to spokesman Darrel Ng.
"The filings made are proprietary. They are not public record, and we
don’t publicly acknowledge that we’ve received them," Ng said.
"We carefully examine every filing made by a health insurer to make
sure that it complies with state law, specifically that 70 percent of
every premium dollar is being spent on medical benefits," he said.
An actuary assigned by the insurance commissioner to investigate the
Anthem Blue Cross rate hikes, and the subpoenas from the attorney
general and the Assembly could elicit some information that sheds more
light on health insurance rate decisions.
Anthem Blue Cross says it complies with the law.
Brad Kieffer, a spokesman for Health Net, said the company would not
publicly discuss how it sets its rates or any hikes in premiums.
Angry Consumers
Meanwhile, Jeanne Morales of Encino had to settle for a cheaper plan
with fewer benefits when her insurer, PacifiCare, informed her in
January of a 30 percent increase that would have brought her monthly
premiums to $2,432 for her and her husband. Just last October, their
premiums rose 16 percent.
"At the time, I thought it was getting out of hand," Morales said. "I
had toyed with the idea of getting new coverage or dropping. But there
aren’t many good options out there."
Her only option, she said, was to downgrade to a policy with lower premiums, higher co-pays and diminished coverage.
"I was totally annoyed. It isn’t just Anthem Blue Cross. … I think all
of them should be under fire. I think it’s outrageous," Morales said.
"We regulate so many things in this county," she said, "and the fact
that we just can’t get any regulations in the insurance industry is
beyond belief."
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