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Anthem Blue Cross withdraws big California rate hike

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Insurance giant Anthem Blue Cross withdrew plans to raise health insurance rates for Californians by as much as 39 percent after an independent audit determined the company's justification for raising premiums was based on flawed data, state Insurance Commissioner Steve Poizner said Thursday.

Anthem, a unit of Indianapolis-based WellPoint Inc., said separately it will file a new application for a rate increase with the California Department of Insurance and the Department of Managed Health Care, perhaps as early as next month. It added that any errors in its original application were inadvertent.

"The current application that was withdrawn today was just flawed," Poizner said during a conference call with reporters. He added that it contained mathematical errors and in some instances double counting of data.

Neither Poizner nor Anthem officials said just how big the insurance giant's next proposed increase would be.

But Poizner, who is seeking the Republican nomination for governor, said he expected it would be substantially less than the original.

"You can count on this," he said. "A 25-percent average rate increase up to a maximum of 39-percent rate increase, that's not going to happen in California."

Among those critical of the initial proposed increase was President Barack Obama, who cited it as an example of out-of-control health costs while arguing for reform.

U.S. Secretary of Health and Human Services Kathleen Sebelius praised Anthem's decision to withdraw the rate hike.

"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," Sebelius said.

Anthem notified policyholders last January that the increase would go into effect March 1. After a public outcry, the company put it on hold.

"By refiling our individual rate requests, we will also utilize updated and real-time medical utilization information as well as address inadvertent miscalculations related to the way in which we estimated our future medical costs in our initial filings," the company said in a statement.

Los Angeles-based Anthem's parent, WellPoint Inc. of Indianapolis, announced this week it will comply ahead of schedule with the federal health care reform provision that limits cases in which insurers can cancel coverage when a customer gets sick.

WellPoint operates Blue Cross Blue Shield plans in 14 states. Anthem Blue Cross is the trade name of Blue Cross of California.

The withdrawn increase also includes rates of Anthem Blue Cross Life and Health Insurance Co.

When it files its new proposed rates, Anthem said policyholders will be notified at least 30 days before they go into effect and current rates will remain unchanged until then.

Poizner said state insurance officials will review the change to make sure it adheres to all state statutes.

He added that state officials immediately suspected Anthem's original proposal was inaccurate, but company officials insisted it was not. However, the company agreed to the independent evaluation by outside experts that subsequently uncovered the errors.

The study, more than 100 pages in length, will be released in the next few days, Poizner said. He said the cost of the study, which was not disclosed, is being billed to Anthem.

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  • Note to Ms Braly; lying and thievery are sins
    More blatant deception by Angela Braly's Wellpoint. The actuarial firm found "multiple, significant errors" with Anthem's proposal, including its calculations of medical claims trends. The report -- conducted by the actuarial consulting firm Axene Health Partners -- found that among other errors, Anthem overstated medical costs. Those errors "would have led to massive and unjustified rate increases," California Dept of Insurance Poizner said, adding that Anthem was notified about the errors "and they admitted to the mistakes." Note to Ms. Braly: In Indiana we teach our children that its wrong to lie, and that excessive greed and thievery are sins.
  • And Indiana?
    Any chance Indiana's insurance commissioner will follow suit and order an independent review of proposed huge rate hikes here?
    Oh ... What was I thinking?!

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