Citing a pattern of “unreasonable rate increases” for small business customers by Anthem Blue Cross, California Insurance Commissioner Dave Jones said Thursday he will recommend that the state’s new online insurance marketplace exclude the firm from selling small business coverage.
The move comes amid national debate about the cost of coverage for individuals and small businesses that will be sold in the new marketplaces, which open for enrollment this fall. In California and a handful of other states, the marketplaces do not have to accept every insurer that applies, but will choose from among applicants.
Jones said Anthem had raised rates more than 17 percent in the past year for small business customers. While he does not have the power to reject rate increases, the federal health law says state insurance commissioners can recommend that the marketplaces, often called exchanges, exclude insurers with a pattern of excessive premium increases.
For its part, Anthem told the Los Angeles Times that small business rates are going up 11.5 percent on average this year, reflecting the “economic reality” of rising healthcare costs. Its spokesman warned that excluding the firm, and its sister company, Blue Cross of California, would sharply reduce competition.
The firm has already been selected as one of those that will sell coverage to individuals through the new marketplace, called Covered California. Jones’ recommendation does not affect that decision.
Covered California’s executive director told the Los Angeles Times that Jones’ recommendation on Anthem’s participation in small business coverage will be considered, along with other factors. A decision will be made sometime between now and August, he said.
California’s insurance commissioner has often fought with insurers over rates, but the office does not have authority to reject premium increases, although it does review them. Several legislative attempts to give the insurance commissioner power to reject health insurance rate increases have failed. In November 2014, voters will decide whether to give him that authority in a ballot initiative.