THE BLOG

Anthem Individual Health Insurance Prices -- Worse Than Reported

04/14/2010 05:12 am ET | Updated May 25, 2011

Anthem Blue Cross is raising rates this year on its California individual insurance plans by up to 39%. It's all over the news and Congress is investigating. I'm thrilled at the attention this is getting, but surprised that it was only noticed this year.

Consider the following: In August 2007, I purchased health insurance for my daughter who had just graduated college and was taking a year off before graduate school. I wanted to make sure she had coverage in case something serious happened, and purchased a high deductible policy. The policy was a Blue Cross PPO Share 5000. That's a PPO plan with a $5,000 deductible, but with full access to all Blue Cross PPO providers and a $5,000,000 lifetime benefit. My daughter was 21 years old, so the rate was a fairly reasonable $84.

Six months later, in February 2008, my daughter was informed that her monthly premium had gone up to $109 per month, a 30% increase. She was annoyed, but since she had just 6 months left before going to graduate school (where she would be on a university health plan) she just paid and kept the policy.

Hearing about the Anthem Blue Cross rate increase, I thought I'd check what had happened to my daughter's plan in the intervening two years. Well here it is:

In early 2009, her premiums would have gone up from $109 to $134. That's a 23% increase. And the premiums for the same plan are scheduled to go up next month to $179 per month. That's an additional 34% increase. In total, in the two and a half years that have passed since my daughter first purchased this insurance policy, her insurance premiums would have gone up by 113%!

Apparently Anthem Blue Cross and its parent company Wellpoint are telling Congress that they're sticking to the requirement that 70% of the premiums they collect will be going to medical care. That may be true. But perhaps they're shifting costs so that individual policy holders bear the brunt while group plans are exempt?

The following is information from a broker dealing in Anthem Blue Cross large group insurance in California. They monitor trends; the average increases that they see on different types of plans. For Anthem PPOs, like the plan my daughter had, the average increase last year for large groups was about 10.5%. The same the year before. For this year they're expecting it to be slightly higher, about 12-13%.

That's a radical difference between individual and group plans. It means that over the past three years Anthem Blue Cross large group PPO premiums have gone up about 36%, while for individual plans, some increases have been well over 100%.

Why would individual plans go up so much more than group plans? Is it perhaps because individuals have less influence and buying power? Yes, perhaps 70% of its premiums are going to medical care, but it looks like Anthem could possibly be shifting the cost from group plans to individuals.

Contrast this with my state-regulated individual Anthem Blue Cross "HIPAA" plan. During the past two years, my monthly premium increased only 3%. To be more specific, it went from $545 in 2007, down to $530 in 2008 (because the California insurance commissioner found that Anthem was overcharging...), and up to $562 this year. This is a plan specifically intended for people with pre-existing conditions, but you don't have to have a pre-existing condition to buy it. More about it here. Perhaps it's time the state stepped in and started regulating the premiums on all individual health care plans, not just the HIPAA plans.