The Los Angeles Times reports that several major health insurers — including Anthem Blue Cross and Aetna — are seeking to increase the premiums they charge individual policyholders in California by double digits.
The move by Anthem and its fellow insurers has drawn ire from consumers and watchdog groups from across the state, especially in light of the fact that medical inflation has been at historic lows over the past several years:
Anthem customer Ellie Podway, 55, of Pasadena said she and her husband received a letter the day before Thanksgiving informing them of a 14% rate increase to $881 a month, effective in February. Since 2010, Anthem has boosted the couple’s monthly premium 81%, she said.
“This is out of control,” Podway said. “You feel like you’re being sucker punched over and over.”
Anthem, a unit of Indianapolis insurance giant WellPoint Inc., isn’t alone in levying double-digit rate hikes.
Aetna, the nation’s third-largest health insurer, wants to boost premiums 19%, on average, for nearly 70,000 individual customers in California, effective in April. Woodland Hills insurer Health Net raised rates last month 14%, on average, for more than 30,000 individual policyholders and their dependents statewide. Blue Shield of California is expected to file for rate increases for individual customers next week.
Industrywide, health insurers have been helped by historically low increases in medical costs the last few years as consumers postponed doctor’s visits and other care to avoid out-of-pocket expenses in a sluggish economy. U.S. healthcare spending has grown less than 4% annually the last three years, according to government figures, the lowest rates in more than 50 years.
Anthem claims that the premium increases are necessary due to the rising cost of insuring health benefits, and claims the group will not rake in significant profits from the rate hikes. By contrast, however, California employers say that their health benefit costs only rose by about 5.5 percent, and the nonprofit Kaiser Permanente is seeking a far more modest 8 percent increase in its rates — suggesting that such drastic hikes aren’t actually essential.
It’s difficult to keep health insurers in check in an era of rising medical costs, particularly on the individual policyholder market, although the health reform law does include important consumer protections to help safeguard Americans from predatory practices. Come 2014, Obamacare hopes to drive premium costs down by forcing insurers to compete with one another on statewide insurance exchanges, giving Americans on the individual and small business markets increased bargaining power. The health law also contains a “medical loss ratio” provision — dubbed the “80/20 rule” — that requires insurers to spend 80 cents of every premium dollar they charge on actual health care services rather than their own overhead or profits.