WellPoint Cancels 39-Percent Rate Hikes In California
Anthem Blue Cross, a California-based unit of WellPoint withdrew its request to hike rates by up to 39 percent for some policyholders after state regulators concluded its plan included "all kinds of methodological mistakes," the Los Angeles Times reports. A consultant to the state regulators said correcting those mistakes would push the average rate increase down from 25 percent to 15 percent. WellPoint called the errors "inadvertent miscalculations" (Helfand, 4/30).
"The proposed rate hikes became a big political issue at the state and federal levels, leading to high-profile hearings in Washington, D.C., and helping to generate momentum for the recently passed health overhaul ...," The Wall Street Journal reports. "The company had in February agreed to delay the higher rates until May. They were originally supposed to start in March." The insurer plans to submit a new rate hike increase in May, and regulators expect the new numbers to be more modest (Mathews, 4/30).
The Associated Press: California Insurance Commissioner Steve Poizner said, "You can count on this A 25 percent average rate increase up to a maximum of 39 percent rate increase, that's not going to happen in California." U.S. health secretary Kathleen Sebelius said, "Today's announcement is good news for the more than 800,000 Californians who could have been hit with massive rate increases and gives them some much-needed temporary relief" (Rogers, 4/30).
The Sacramento Bee: "The state-hired actuary, Axene Health Partners, found double counting in projected costs. It said the company apparently overstated medical trends in projecting the number of claims for known risk factors. Still, the review found that all but one of the plans appeared to meet the current state requirement that at least 70 percent of premiums be spent on direct medical costs." The next filing will correct mistakes in estimating methods, a WellPoint spokesperson said without mentioning the actuary's report. The filing will also reflect a requirement of the new federal health law that 80 percent of premiums go to medical costs (Calvan, 4/30).
Meanwhile, "After being criticized as obstructionists during the long health-care debate, insurance companies" -- including WellPoint -- "now are implementing some popular provisions even sooner than the law demands," The Washington Post reports. Insurers said they will end rescission, the practice of canceling policies because of even minor discrepancies when members get sick. They also said they will allow people up to 26 years old to remain on their parents insurance plans (Hilzenrath, 4/30).