News: 2013 Press Release

SAN FRANCISCO - Insurance Commissioner Dave Jones announced today he is recommending Covered California exclude Anthem Blue Cross Life and Health Insurance Company (Anthem) and Anthem Blue Cross of California from participating in the Small Business Health Options Program Exchange, which is set to begin enrollment of new health insurance coverage in October.

This recommendation comes after the Commissioner determined that Anthem's July 1, 2013 7.2 percent average quarterly rate increase on small employers is unreasonable the third Anthem small employer rate increase found to be unreasonable in 2013 alone. The 12-month cumulative increase for these Anthem customers is 17.6 percent. Had Anthem reduced its rate increase to a reasonable level, it would have resulted in $37 million savings for policyholders over a 12-month period.

"This is the third unreasonable rate increase imposed by Anthem Blue Cross on its small employer customers this year alone," said Commissioner Jones. "Anthem has engaged in a pattern of excessive and unjustifiable rate increases for its small employer customers and therefore they should not be permitted to participate in California's small employer health Exchange."

California Department of Insurance actuaries carefully reviewed each of the three Anthem rate increases imposed on small employers this year and found them to be unreasonable. Anthem's rate increases have included overestimation of future claims and medical costs, and charging fees this year that are not due until late next year. Anthem is charging small group policyholders $1.5 million in 2013 for healthcare reform fees and taxes that are not due to the government until late 2014. Anthem also has an excessive profit of 25.2 percent in 2012.

"Anthem's unreasonable rate increases hit California's small employers at the very moment when they are struggling to climb out of the worst recession since the Great Depression," said Jones. "Although the Department of Insurance has determined after careful review that Anthem's rate increases are unreasonable, the Affordable Care Act does not prevent Anthem from charging unreasonable rates. The only potential consequence under the Affordable Care Act is to exclude Anthem from the small employer health benefit Exchange, and that is exactly what I am recommending."

Commissioner Jones also is recommending that Anthem's sister company, Blue Cross of California, also not be permitted to participate in the Small Business Health Options Program Exchange because the two companies share corporate officers, are ultimately owned by the same parent company, and have moved policyholders between the two sister companies.

Media Notes:

Commissioner Jones' recommendation is pursuant to section 2794(b)(1)(B) of the Public Health Service Act, which is part of the Affordable Care Act. The act requires state insurance commissioners to make recommendations to the Exchange about whether particular health insurers should be excluded based on a pattern or practice of excessive or unjustified premium increases.

Anthem's 2013 rate filing history

• Anthem's average 12-month increase for small group policies renewing January-March 2013 was 10.6 percent; the quarterly rate increase was 2.4 percent.
• Anthem's average 12-month increase for small group policies renewing in April-June was 10.5 percent; the quarterly rate increase was 5.1 percent. 
• Anthem's average 12-month increase for small group policies being renewed in July-September will be 17.6 percent; the quarterly increase will be 7.2 percent.
• Anthem's 2012 profitability, as measured by annual rate of return on equity is 25.2 percent.

Photos are available

Anthem BC Life & Health Co (Anthem BC) Rate Review in California