The top California insurance regulator and a major player in the state’s health insurance market are jousting over small-group rate increases.
California Insurance Commissioner Dave Jones today said that Anthem Blue Cross Life and Health Insurance Company and Anthem Blue Cross of California — units of WellPoint Inc. (NYSE:WLP) — have been imposing unreasonable rate increases.
The increases are so high and so frequent that managers of the state’s Patient Protection and Affordable Care Act (PPACA) small-business exchange should could keep WellPoint plans off the small-group exchange plan menu, Jones said both at a press conference and in a widely distributed press release.
“Anthem has engaged in a pattern of excessive and unjustifiable rate increases for its small employer customers,” Jones said in a statement.
WellPoint argued that it’s small-group increases are in line with what competitors are doing and with increases in its underlying costs.
The increases “represent an economic reality faced throughout the entire industry as health care costs continue to escalate faster than our state’s economy as a whole,” WellPoint representatives said.
WellPoint’s Anthem Blue Cross Life company has announced plans to impose a small-group quarterly rate increase of 7.2 percent July 1. The 12-month cumulative increase is 17.6 percent, officials in Jones’ office said.
WellPoint representatives said it had a profit margin of just 1 percent on the small-group business in 2012.
Santiago Lucero, a spokesman for the California Health Benefit Exchange — the agency building the Covered California Small Business Options Program (SHOP) small-group exchange — said the agency is outside of Jones’ direct jurisdiction.
“We will consider his recommendations as part of our overall review of our small-employer program,” Lucero said in an interview.
Anthem plans are already on the individual exchange plan menus.
California has decided to set up its own, state-based PPACA exchange system, rather than having the U.S. Department of Health and Human Services (HHS) provide exchange services for its residents. California also has decided to be an “active purchaser” of the “qualified health plans” (QHPs) authorized to sell coverage through the system, meaning that managers are supposed to try to make active efforts to improve the quality and lower the cost of the Covered California QHPs.
In May, California officials said they hoped to talk about the SHOP exchange plan QHP menu “in early June.”
The exchange has pushed the SHOP menu release date to August, because managers are still in negotiations with the parties involved, Lucero said.
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