Anthem Blue Cross could owe big refund checks to 730,000 Californians if its proposed rate hikes of up to 25% are deemed excessive thanks to an initiative voters will consider on the 2014 ballot.
The ballot measure requires health insurance companies to get approval before raising rates and allows that refunds be ordered on rates that are considered excessive after November 6, 2012. When voters approve the measure, the insurance commissioner will have the power to retroactively order refunds for excessive rates.
Read the initiative here
"Anthem and every health insurance company in California are on notice: Excessive rate hikes they impose today could mean big refund checks for consumers down the road," said Carmen Balber with Consumer Watchdog.
Anthem has proposed rate hikes averaging 18%, and as high as 25%, for 630,000 individual policyholders.
It has proposed rate hikes averaging 15%, and as high as 25%, for another 100,000 individual policyholders.
The Insurance Rate Public Justification and Accountability Act qualified for the ballot in August, after Consumer Watchdog Campaign and allies submitted petitions containing 800,000 voter signatures.
"Californians can no longer afford the outrageous double-digit rate hikes health insurance companies like Anthem have imposed year after year, and sometimes multiple times a year, " said Jamie Court, proponent of the ballot measure and president of Consumer Watchdog. "This initiative gives voters the chance to take control of health insurance prices by forcing health insurance companies to publicly open their books and justify rates, under penalty of perjury."
Senator Dianne Feinstein, the first person to sign the ballot petition, is an honorary co-chair of the ballot initiative campaign, which is also supported by California Insurance Commissioner Dave Jones.
The ballot initiative builds on California's successful model of rate regulation for auto, home and other property and business insurance. That law, Proposition 103, was enacted by the voters in 1988 and has saved California drivers $62 billion since it was enacted.
The Insurance Rate Public Justification and Accountability Act:
- Requires health insurance companies to publicly disclose and justify, under penalty of perjury, proposed rate changes before they take effect.
- Makes every document filed by an insurance company to justify a rate increase a public record.
- Requires public hearings on proposed rate increases.
- Gives Californians the right to challenge excessive and unfair premium rate increases.
- Prohibits health, auto and home insurers from considering Californians' credit history or prior insurance coverage when setting premiums or deciding whether to offer coverage.
- Gives the elected insurance commissioner authority to reject unjustified rate increases.