On Wednesday, California Insurance Commissioner Dave Jones (D) called Anthem Blue Cross' premium increase for small business health plans "excessive," the San Francisco Chronicle reports (Colliver, San Francisco Chronicle, 10/22).

Jones' office can review rate filings, but it does not have the authority to reject them.

The 9.8% increase was filed with regulators in July and was implemented on Oct. 1. It affects about 15,000 small businesses with about 120,000 employees and dependents.

Details of Jones' Comments

Jones said that Anthem used an "unwarranted accounting maneuver" to justify the rate increase.

Specifically, he said Anthem placed $75.5 million into a "premium deficiency reserve" in order to understate its profits and inflated its prescription drug cost projections.

He noted that his office found that a 2.1% rate increase would have been more appropriate. "These policyholders could have saved over $33 million had [Anthem] lowered rates as we requested," he added (Terhune, Los Angeles Times, 10/22).

Anthem's Response

Anthem said the actual rate increase will be 7.8% because of new data that came after the initial filing. The insurer also noted that it met a federal requirement to spend at least 80% of premiums on medical care (Rauber, "Bay Area BizTalk," San Francisco Business Times, 10/22).

However, Jones in a release said the 7.8% increase still is "excessive and unreasonable" (Shinkman, Payers & Providers, 10/23).

Anthem spokesperson Darrel Ng said the insurer "could not comply with the commissioner's request" to increase rates by 2.1% because it "would have led to widening losses" (San Francisco Chronicle, 10/22). The insurer already has taken an $8.5 million loss in the small-group market, according to Ng.

In addition, Anthem noted that it took Jones' office took about 100 days to review the rate filing ("Bay Area BizTalk," San Francisco Business Times, 10/22).