Is Affordable Health Insurance still possible in California?

“ Reasons for increase include normal cost shifting from Medicare, MediCal and the uninsured. ”

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(iHealthWire.Org) – www.benefitpackages.com -- There has been huge controversy over the Anthem Blue Cross premium increase that was scheduled for March 1st 2010. Brian Sassi, President of Anthem’s California’s individual business unit, responded to Health and Human Services Secretary Kathleen Sebelius request for a justification of the increase February 11th with a five page response that can be summarized as follows:

Net income per member per month was $12.62 in 08 which was less than their two not-for-profit competitors.

Individual California business comprises only 10% of their 8 million members.

The reported 39% increase on individual members' plans includes adjustments for aging, and affects only a small percentage of plans participants -other options were given to mitigate increases such as adding a deductible.

After increases a 40 year old Los Angeles woman with a $1,500 deductible can enroll for $156 monthly.

Reasons for increase include normal cost shifting from Medicare, MediCal and the uninsured.

Economic recession has encouraged healthy members to drop their policies-in-turn causing the risk pool to include a higher percentage of high claim members.

IN 09. Anthem lost $58 million on HIPAA plans (available after COBRA is exhausted) and 10 million in Ca Major Risk, the only PPO in the State's high risk pool.

Anthem submitted their request for a premium increase to the Department of Insurance more than 60 days before the scheduled increase and was not told that further scrutiny would be required. An independent actuarial firm did review their medical loss ratios (MLR’s) before the increase request was submitted.

When publicity hit from the size of the increase those in public office yelled foul. The size of the increase coupled with fact that Anthem Blue Cross's parent company, Wellpoint Inc., earned a record $2.7 billion in profits for the last quarter of 2009 was not going to fly in these tough economic times. The broad brushed fear mongering of the press and politicians is scaring all Anthem members. The large percentage increase didn’t affect employer based plans nor senior plans. Additionally, the biggest numbers cited were on a minority of plans and those members were given other options.

The question for this agent is whether or not Anthem should soften the blow of the increase with money earned from other business sectors or other states: for example, should they mitigate the premium increase of Ca. individual business with profits made from large employer groups in other states. Should each plan and portfolio have to be profitable every year? If laws limit increases irrespective of profits your obviously going to hurt the viability of the carrier. A carrier might not want to sell individual health insurance for folks under sixty-five if other lines such as commercial are more profitable.

On the other hand, if individual health insurance is generally profitable, and certain years it’s not, shouldn’t spreading the risk among a larger pool be what carriers are supposed to do? Having quality affordable health insurance should be one of the reasons that someone would prefer to have a policy with a giant like Anthem. Certainly there would need to be an even playing field among carriers. This is one more argument for common sense reform. Carriers aren’t the evil empire, especially carriers like Anthem Blue Cross who are losing millions of dollars to help folks with insurability issues through state risk pools and other means.

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