So now, not only is the California Insurance Commissioner investigating Anthem Blue Cross’ premium increases, the federal government is getting into the act too. Yesterday, the Health and Human Services Secretary Kathleen Sebelius requested that Anthem Blue Cross provide detailed justification and information regarding the rate increases:
I believe Anthem Blue Cross has a responsibility to provide a detailed justification for these rate increases to the public….Additionally, you should make public information on the percent of your individual market premiums that is used for medical care versus the percent that is used for administrative costs…
Policyholders in the individual market deserve to know if their premium increases would be invested in better medical care or insurance company overhead costs like salaries, profits, and advertising. I am aware that the state of California is investigating this matter, and urge Anthem Blue Cross to cooperate fully. In the meantime, I will be closely monitoring the situation.
California law only requires that 70 cents out of every dollar paid in health insurance premiums go to the medical care, and honestly, the California Insurance Commissioner is probably not going to find otherwise with these new rate hikes. It’s unlikely that Anthem Blue Cross would have instituted these premium increases without being able to show that they would pass the 70% litmus test.
However, with the federal government getting involved, Anthem Blue Cross may have to start doing a little rethinking…
We’re still staying tuned.