Health insurer now seeks 14 pct Calif. rate hike

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The Anthem Blue Cross headquarters is seen after the health insurer began informing its individual policyholders of rate hikes up to 39 percent to take effect at the beginning of March, on February 9, 2010 in Woodland Hills, California.

Health insurer WellPoint said Wednesday its Anthem Blue Cross subsidiary in California now plans to raise rates by 14 percent on average for people insured individually, a drop from planned hikes that drew national criticism.

In April, the company withdrew an average increase of 25 percent after it received strong rebukes from consumers, President Barack Obama and members of his administration.

WellPoint now says it will cap the new increases at 20 percent, compared with 39 percent in the first plan.

WellPoint backed off its original increases after an independent audit determined they were based on flawed data. California Insurance Commissioner Steve Poizner said in April the audit found mathematical errors and, in some cases, double counting of data.

WellPoint officials said Wednesday those errors had a "minimal impact" and the new rates are lower for several reasons, including the use of more recent claims data.

The insurer also cut its rates with the hope of expediting regulatory review because a delay would "just compound the issue into next year" said Brian Sassi, president and CEO of WellPoint's Consumer Business unit.

WellPoint says it needs to raise rates to cover its costs of doing business. The increases were supposed to go into effect March 1. It expects to lose $100 million this year on its California individual insurance business.

"Our losses are really primarily driven by the lost revenue just from the six-month delay we already have," Sassi said.

State regulators have 30 days to review the rates, and then the insurer must give customers 30 days' notice on the hikes.

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Associated Press Writer Shaya Tayefe Mohajer contributed to this report from Los Angeles.

© 2010 The Associated Press. All rights reserved.

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