Conn. AG Urges Insurance Department to Nix Anthem Blues' Proposed Rate Hike

The Connecticut attorney general is telling the state Department of Insurance that new information shows that Anthem Blue Cross and Blue Shield's proposed premium increase on health insurance policies sold to individuals is "excessive" and should be rejected.

Earlier this month, state Attorney General Richard Blumenthal urged Connecticut Insurance Commissioner Thomas R. Sullivan to reject Anthem's request to increase premiums up to 30% starting in October on policies sold to individuals (BestWire, July 8, 2009). In a letter to Sullivan, Blumenthal dubbed the health insurer's proposed 22% to 30% rate increase "outrageous."

In a post-hearing filing with the department, Blumenthal, along with health care advocate Kevin P. Lembo, contend that at least one in five Anthem members, more than the company characterized, will receive premium increases of at least 30%. Some members will receive higher increases because they've move into a higher age bracket, according to the joint statement by Blumenthal and Lembo.

Both are asking the insurance department to reopen the record in the case to include their comments. "The data disclosed by Anthem, only after the attorney general requested it, shows how dramatically devastating the rate hike would be," Blumenthal and Lembo said in a statement.

In response to Blumenthal's post-hearing filing, Anthem, a unit of Indianapolis-based WellPoint Inc. (NYSE: WLP), said that at the insurance commissioner's request, it disclosed its entire rate application before the July 20 hearing. 

"It is an indisputable fact that health care costs are continually increasing, leading to higher premiums for consumers," Anthem said in a statement. "The increasing need for medical services, the use of new, expensive prescription drugs, and advanced technologies are driving up the cost of health care often results in higher premiums for consumers."

Earlier this month, the insurance department said Sullivan "agrees with some" that the rates requested by Anthem are too high and understands the impact the increase may have on Anthem's individual members, which represents 4% of the health insurer's total membership of 1.4 million statewide. The department said its review will continue past July 9 and that Anthem agreed not to implement any rate hikes until it takes final action on company's rate request (BestWire, July 8, 2009).

Nevertheless, Blumenthal and Lembo are urging the department to reject any rate increase on Anthem's individual policyholders, saying the company has consistently generated millions of dollars in profits from its health insurance business in Connecticut.

"Less than 80 cents of every premium dollar from individual health plans have funded medical services for consumers, yet Anthem wants significantly more money," their statement said.

"If it is approved, a significant portion of Anthem members will face almost a one-third increase in their rates -- making their policies patently unaffordable," Blumenthal and Lembo said. "This fact conflicts with Anthem's explicit promise that its policies will be affordable."

Anthem, which said it's awaiting the insurance department's ruling, said it regularly evaluates its rate structure to make sure premiums collected are adequate to cover claim costs and expenses. "To help keep premiums affordable and health care accessible, Anthem is investing in many initiatives to reduce the cost of care and to promote wellness and preventive care for our members and communities," the health insurer said.

The department previously said the rate Anthem requested is not necessarily the rate it will get, "but some level of rate increase on certain policies will be needed based on adverse claims experience" (BestWire, July 8, 2009).

Under Anthem's requested rate increase, a 30-year-old man enrolled in its most popular plan, its $250 deductible Century Preferred PPO, would see his monthly premium go from $264.70 to $326.51.

Anthem Health Plans Inc. of Connecticut currently has a Best's Financial Strength Rating of A (Excellent).