Anthem Blue Cross Blue Shield had rate increases approved by the California Department of Insurance.  Rate increases average 14% for Anthem Blue Cross and 19% for Blue Shield of California, although Anthem was hoping to get approval for rate increases up to 39%.  The public was outraged over those potential rate hikes so the government stepped in to regulate a lower increase.  Anthem is the largest health insurer in California for-profit, but their proposal for the rate increases was found to have accounting errors so it was withdrawn.

President Obama used Anthem’s proposed rate increases as an example of what is flawed in our health care system.  Consumers should save around $184 million with the lowered rate increases, according to the Department of Insurance.  When you compare health insurance increases by insurers like the nonprofit Blue Shield of California, the insurer says that they have no choice because they are paying that much money out to hospitals, doctors and others for claims.  Both insurers were found to follow the State’s rule that 70% of their income be used to cover actual medical treatment.  Anthem is required to give at least 30 days notice before increasing their customers’ policy costs.

Individual health insurance rates have increased by as much as 20%, compared with employer-sponsored group plan increases closer to 5%.  In the Associated Press article “Survey: Individual health insurance premiums jump,”  Tom Murphy summarizes the results found in the Kaiser Family Foundation’s new survey.  Although individual insurance plans increased by 20%, consumers were able to compare health insurance rates at other providers causing many to switch.  Switching providers lowered the average price increase to 13%, still much higher than the employer-sponsored family plan increase of 5%.  Individual employer-sponsored plans stayed almost the same from year to year.

The individual health insurance market is used by 14 million or so Americans under the age of 65, while 157 million participate in employer-sponsored plans.  Anthem Blue Cross Blue Shield of California came under fire last year for their request of 20% premium increases, but they argue that the increases are fully necessary.  All of these individual health insurance increases most likely added to the health care reform debate and the bill that was passed in March.  Almost half of the people surveyed purchase individual health insurance because they are self-employed or own small businesses.  We’ll see what the health care changes bring about for the individual market’s costs.