Maine Judge Says Insurers Are Not Entitled To Profits, Backs State’s Effort To Control Growth Of Premiums

Back in October, Anthem Blue Cross and Blue Shield of Maine, the state’s largest private insurer, sued the state after Maine’s Superintendent of Insurance denied Anthem a rate increase that would have required Maine residents to pay an “additional $12 million in annual premiums for the same level of benefits.” Under Anthem’s proposed increases, the average policyholder would have had to spend “more than $13,000 in premium and deductibles, prior to becoming eligible to receive any health benefits under the policy.”

After reviewing Anthem’s annual rate increases for policies sold within the individual health insurance market, Maine rejected the company’s proposed rate increase of 18.9%, but allowed the company to “break-even” in its individual market division and increase “rates by just 10.9%.” According to court documents obtained by the Wonk Room, Anthem, a subsidiary of Wellpoint Inc., argued that beyond simply ‘breaking-even’, the government must guarantee the company a 3% profit.

On Wednesday, the Maine Superior Court affirmed the decision by state regulators to cut the increase, ruling that Maine law does not “expressly entitle insurers to a mandated profit margin”:

The judge also said it was not improper for the superintendent to consider the state of the economy and profits from Anthem’s other lines of insurance in making her decision on the proposed increase.

Insurance Superintendent Mila Kofman called the decision “good news for Maine consumers.’’ Attorney General Janet Mills said Anthem “cannot impose high rate increases on the backs of individual policyholders to maximize its corporate profits.’’

“In the past three years alone, Anthem turned over $200 million in dividends to its parent company Wellpoint, one of the largest health insurers in the country,’’ Mills said.

This ruling establishes a positive precedent for future lawsuits (which are almost inevitable given the new health care law’s rate review procedures) and the case in Massachusetts, where insurers are suing the state for using its rate review authority to reject “235 of 274 increases proposed by Massachusetts health insurers for small businesses and individuals.”


Currently, more than thirty states have the authority to regulate premiums in the individual or small group markets and Sen. Dianne Feinstein (D-CA) has proposed legislation to allow the federal government to review and reject insurance premium increases in states that don’t already have this authority. The industry is obviously resisting the effort.