Anthem Blue Cross Withdraws from California Small Business Exchange

Health insurance company Anthem Blue Cross has withdrawn from California health insurance exchange for small businesses. Anthem will continue to offer health insurance to small businesses outside the marketplace. Anthem is California’s largest health insurance company in small group market. This makes Anthem the first health insurance company in California to withdraw from small business exchange. Earlier United Healthcare and Aetna had withdrawn from California individual health insurance marketĀ completely.

Anthem Blue Cross Withdraws from California Followin Dave Jone's Recommendation to Ban it from Covered California

Anthem Blue Cross Withdraws from California Followin Dave Jones’s Recommendation to Ban it from Covered California

California has set up health insurance marketplace (also called health insurance exchange) called Covered California. Policies under Affordable Care Act (Obamacare) will be sold from the exchange.

Affordable Care Act empowers and directs state insurance commissioners to examine the pricing of health insurance policy. The insurance commissioners have the authority to act against insurance companies with unreasonably high premium.

California’s insurance commissioner Dave Jones had asked the health insurance exchange to bar Anthem Blue Cross. Mr Jones had made the recommendation in light of Anthem’s pattern of excessive and unjustified rate increases.

In light of the commissioner’s recommendation Anthem Blue Cross decided to withdraw from the market. Staying put would have meant more scrutiny of its rate hikes and public debate.

Anthem’s History of Rate Hike in 2013

Anthem had increased its rates by 7.2% on July 1. This resulted in a 17.6% cumulative increase in health insurance cost for its small business customers in last 12 month period. This is how Anthem increased rates in 2013.

  1. 10.6% increase for small group policies renewing between January-March 2013.
  2. 10.5% increase for small group policies renewing between April-June 2013.
  3. 17.6% increase for small group policies renewing between July-September 2013.

Will Anthem’s Withdrawal Result In Lower Competition?

It is unlikely that Anthem’s withdrawal from Covered California’s small business exchange will result in lower competition. Unlike United Healthcare’s and Aetna’s complete withdrawal from individual health care segment Anthem is withdrawing only from the exchange. The company will continue selling small group health insurance in the open marketplace.

Withdrawal from the marketplace means Anthem will not have access to federal tax credits and business subsidized by taxpayers.

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