business
California regulators ask health plans to justify rate hikes
NEWS IN BRIEF — Posted May 2, 2011
The California Dept. of Managed Health Care, which regulates the state's HMOs, has asked Anthem Blue Cross of California and Blue Shield of California to explain why they have raised premiums dramatically for thousands of customers in recent months.
The state's Dept. of Insurance already has required both companies to justify the recent increases, but neither agency has the authority to block rate hikes unless a plan violates the state's minimum medical spending ratio.
Blue Shield of California has raised rates on about 70,000 individual subscribers twice since October 2010, first by 18.8% on Oct. 1, 2010, then an additional 15.8% on Jan. 1, 2011. In an April 19 letter, the DMHC asked for justification of the large cumulative increase.
An April 8 letter from the DMHC to Anthem Blue Cross asked the company why it plans to raise rates higher in May for its 121,408 HMO customers than it did for its 69,327 PPO customers.
The insurers have said they stand by their rates and that they are losing money in the individual market despite the increases.
Note: This item originally appeared at http://www.ama-assn.org/amednews/2011/05/02/bibf0502.htm.
