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Anthem To Raise Premiums While Making Huge Profits

KCET, 3/4/11

By Jessica Porter
KCET
March 4, 2011

Anthem Blue Cross spent $2 million lobbying the California legislature and another $1.6 million on campaign contributions between 2009 and 2010. It lobbied the Department of Managed Health Care, the Department of Insurance and the Governor's office regarding health insurance regulations.

In particular, Anthem spent a significant amount of time lobbying against SB1163, a piece of legislation that gave the state the power to review premium increases.

So what, you say? Anthem is planning to raise its premiums almost 15 percent for more than 150,000 of its members.

California is an obvious battleground for health insurers. WellPoint Inc., which owns Anthem Blue Cross of California and made $2.9 billion last year, told investors in financial filings that a significant chunk of its revenues are generated right here in the state.

Yet Anthem has claimed it hasn't made a profit on individual health plans in years. In rate filings Anthem supplied to the Department of Managed Healthcare, the insurance giant stated that it must raise premiums just to keep up with the cost of medical care. It blamed new and expensive prescription drugs and "deteriorating population health" because of obesity for the rising cost of care.

Health insurance organizations say that more time should be spent by the legislature finding ways to keep down the cost of medical care and not on rate regulation.

"We would love for there to be greater transparency so that the public will have information on hospital rates that are contracted, so people can see the actual cost behind health coverage," said Nicole Evans of the California Association of Health Plans, a special interest group that advocates for some of the biggest health insurance companies in California, including Anthem.

Last year, Anthem tried to raise customers' rates by 39 percent, but instead settled for a 14 percent increase after claiming it had made a miscalculation, according to the California Department of Insurance.

At the same time, Anthem denied some 6 million claims, according to a study by the California Nurses Association. That amounts to 27 percent of all its claims for 2010, leaving affected patients and hospitals to pay the bills. The company reported $413 million in profit that year.

The Department of Managed Health Care can do little to stop the rate increases. Last year, SB1163 gave the department authority to review premium increases, but no authority to approve or reject them.

Assembly member Mike Feuer (D-Los Angeles) has introduced legislation that would give the department the power to approve, deny or modify rate proposals. Feuer's bill, AB 52, will be going to a committee for review in May.

Anthem had originally intended to raise premiums on April 1 but has agreed to a 60 day hold. That would give the Department of Insurance more time to verify that the increases follow the new health reform law, which requires 80 cents of every dollar earned in premiums be applied to medical care and not to profits.

If the Department of Insurance doesn't find any inconsistencies, rates would go up beginning June 1.

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