Having failed in its bid to hike premiums for individual health insurance policies up to 39%, Anthem Blue Cross announced this week a revised plan to raise them up to 20%. That's still a staggering percentage, and it's a good thing that state Insurance Commissioner Steve Poizner has retained independent actuaries to scrutinize proposed rate increases by all the major health insurers. Even more assurance would be provided in a bill by Assemblyman Dave Jones (D- Sacramento) to give the insurance commissioner greater authority to block excessive health insurance rates, just as it regulates auto and property policies. The Assembly passed the bill last month, and we urge the Senate to follow suit.
But consumers shouldn't lose sight of the underlying problem. Health insurers are seeking ever-higher premiums largely because they're facing ever-higher costs. This is particularly true in the individual market, where the people most likely to sign up for policies are the ones most likely to need treatment. The group market — where insurers sell coverage to employers, unions and other pools of consumers — brings in a broader cross-section of the public, so the cost per person tends to be lower.
Anthem claims that even with its latest proposal, which amounts to a 14% increase on average, it will lose $100 million this year in California's individual insurance market. That's because, it says, its costs went up 5.2% last year in medicines, 6.3% in doctors' services and 5.9% in hospital bills.