Anthem Blue Cross: California individual managed care plan market shrinking, necessitating higher premiums

The California Department of Managed Health Care (DMHC) is questioning the reasonableness of a May 1 rate increase Anthem Blue Cross will be taking for 120,000 individual managed care plan members.

DMHC sent a letter to Anthem Blue Cross asking for an explanation for the rate increase and why it is higher in comparison to indemnity-based insurance products with similar deductibles. DMHC regulates managed care plans in the state.

In an April 25 letter in response to DMHC, Anthem Blue Cross states its individual managed care plan pool is shrinking. The letter strongly implies adverse selection requires it to boost rates to keep up with losses incurred by those members remaining in the pool who tend to use high levels of medical services. Anthem Blue Cross projects it will incur a medical loss ratio of 88.5 percent for individual managed care products for 2011 after a 16 percent rate hike and increased deductibles effective May 1.

See the conclusion section on page 7 of Anthem Blue Cross’s letter.


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Frederick Pilot

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