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CA Blue Cross Customers See Red Over Rate Hike

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By Tanya Roth, Esq. on February 09, 2010 11:48 AM

On Monday, Health and Human Services Secretary Kathleen Sebelius asked California's largest for profit health insurance provider, Anthem Blue Cross, to send a letter detailing what she termed an "extraordinary" rate hike proposed for California customers. Blue Cross is owned by parent company Well Point, Inc. According to the report by ABC News, Well Point saw a profit in the final quarter of last year of $2.7 billion.

According to ABC, California Insurance Commissioner and Republican gubernatorial candidate, Steve Poizner, has asked for additional assistance in investigating whether or not the company is abiding by state regulations requiring companies spend at least 70 percent of premium dollars on medical care, as opposed to administrative costs. Poizner has asked Blue Cross to delay the rate hike until the actuary engaged by his office has an opportunity to complete a report. Poizner told ABC, "The department has received numerous complaints from irate Californians describing how Anthem's proposed rate increases would cripple them financially." 

ABC reports similar hikes are taking place nationwide, although California's appears to be the most extreme. For example, last month Anthem Blue Cross and Blue Shield filed for a 23 percent rate hike on more than 11,000 individual policies in Maine. In November, Oregonians holding individual policies with Health Net Health Plan of Oregon also faced a nearly 23 percent hike.

In a statement reported by ABC, Anthem Blue Cross of California blamed the unstable economy and rising health care costs for the rate hike, while pledging to reply to Sebelius's concerns promptly. The rate hike "highlights why we need sustainable health care reform to manage the steadily rising costs of hospitals, drugs and doctors," a statement by the company said.

The proposed rate hike of up to 39 percent could affect as many as 800,000 Californians.

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