Attorney General, Healthcare Advocate Say New Facts Warrant Rejection Of Anthem Rate Increase

July 27, 2009

Attorney General Richard Blumenthal and Healthcare Advocate Kevin P. Lembo -- in a post-hearing filing with the Department of Insurance (DOI) -- said new facts prove that the proposed Anthem Blue Cross Blue Shield rate increase is excessive and should be rejected.

In a letter to DOI Hearing Officer Mary Ellen Breault, Blumenthal and Lembo said that at least one in five Anthem consumers -- more than the company has characterized -- will receive rate increases of at least 30 percent. Some will receive even much higher increases because they will move to a higher age bracket.

Blumenthal and Lembo requested that the DOI reopen the record in the Anthem rate case to include these comments.

"This new information provides significant factual evidence supporting our position that the Insurance Department should reject the proposed rate increase as excessive," Blumenthal and Lembo said. "The data disclosed by Anthem -- only after the Attorney General requested it -- shows how dramatically devastating the rate hike would be."

Blumenthal and Lembo have urged the DOI to reject any rate increase in any Anthem individual health insurance policy because:

• Anthem is profitable. Anthem 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.

• Anthem could use reserves to shield their insureds from any rate increase. Anthem is seeking a huge rate increase during an economic downturn, when consumers are struggling with lower wages or being laid off and despite having huge reserves for unexpected losses.

• Actual insurance costs do not justify a rate increase. Anthem relies on faulty and phantom factors to justify its rate increase, inflating its projected health care costs by double counting rising health claims of insureds as they age, assessing all consumers for the cost of broker commissions even if the individual did not use a broker.

• Insureds are unprepared for significant increases in insurance costs. Although policies are sold on a calendar year basis, Anthem wants a mid-term increase effective on Oct. 1. Consumers were never notified that such an increase was possible.

"If it is approved, a significant portion of Anthem members will face almost a 1/3 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. While the proposed rate increase has been characterized as ranging between 23 percent and 32 percent, the supplemental information shows that approximately one in five existing members will have increases of 30 percent or more.

"In addition, these increases do not include the increased fees imposed by Anthem on individuals who are moving from one age band to another, for example, a 49 year old moving from the 45-49 year age band to the 50-55 year age band.

"The new information also confirms that Anthem continues to profit handsomely from these individual health policies at the current rate and does not need any increase on any product.

"Since this new information was not available at the time of the hearing but is relevant to the Department's decision in this case, we ask that the Department's include and consider this post-hearing comment as part of the record."