News: 2010 Press Release
For Release: April 29, 2010
Media Calls Only: 916-492-3566
California Department of Insurance Uncovers Substantial Errors in Anthem Blue Cross Rate Filing; Anthem Withdraws Rate Applications
Commissioner Poizner Calls Move a ‘Great Victory’ for California Consumers, Releases Summary of Actuarial Review of Anthem Filing
Commissioner Poizner released the following statement today regarding Anthem's decision to withdraw its rate filing:
"This is a great victory for California consumers. I'm pleased that California consumers will not face rate hikes of up to 39 percent. In late January, because I was highly skeptical of the rate increase, I ordered an outside review to ensure that Anthem's filing complied with state law. Anthem agreed to delay their increase pending this review. The independent actuarial analysis found numerous and substantial errors in their filing that would have led to massive and unjustified rate increases. We notified Anthem of these errors and they admitted to the mistakes."
The independent, outside actuarial analysis was performed by Axene Health Partners, LLC. The report was conducted over a 10-week period and required 500 hours of work by four licensed actuaries. The summary of the review is available by selecting this link and the entire report is expected to be completed next week.
Based upon a thorough review of Anthem's calculations, Axene found numerous errors in the methodology used by Anthem to project total lifetime loss ratios. Correcting these errors resulted in lower lifetime loss ratios than initially calculated by Anthem.
The errors identified included:
- Error #1: Double counting of aging in the calculation of underlying medical trend for the projection of total lifetime loss ratio.
- Error #2: Anthem overstated the initial medical trend used to project claims for September 2009 for known risk factors.
Both of these errors are errors of math and not differences in actuarial opinion.
Please visit the Department of Insurance Web site at www.insurance.ca.gov. Non media inquiries should be directed to the Consumer Hotline at 800.927.HELP. Callers from out of state, please dial 213.897.8921. Telecommunications Devices for the Deaf (TDD), please dial 800.482.4833.
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