June 23, 2018
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Insurer appeals state’s ruling on policy rates

By Meg Haskell, BDN Staff

AUGUSTA, Maine — Anthem Blue Cross and Blue Shield of Maine has appealed a decision by the Maine superintendent of insurance to hold down average monthly premium increases for individual policyholders this year from the 18.5 percent requested by the company last spring to 10.9 percent.

The Maine Bureau of Insurance announced the ruling in May after a series of statewide public hearings. Anthem protested the state’s decision in a court document filed in late August in Kennebec County Superior Court. On Sept. 23, the state Office of the Attorney General answered Anthem’s appeal.

The appeal focuses on the decision by Insurance Superintendent Mila Kofman to allow the company no built-in profit margin for the current fiscal year, which began in July. Anthem, a subsidiary of Indiana-based insurance giant WellPoint, had requested an 18.5 percent rate increase that would support a 3 percent profit this year for policies sold to individual Mainers who are not covered under employer-sponsored group policies. Kofman’s decision reduced the average increase to 10.9 percent.

In its defense of Kofman’s decision, the Attorney General’s Office cited Anthem’s “extremely sound financial condition” and its long history of profitability across all product lines as supportable reasons to curtail profits in the current year. Profits across all product lines, including large group, small group and individual poli-cies, were 7.5 percent in 2008, 9.4 percent in 2007, 5.7 percent in 2006, 5.4 percent in 2005 and 6.7 percent in 2004, according to the Attorney General’s Office defense.

In addition, the office’s response noted that in the three-year period from 2006 to 2008, Anthem’s Maine operation paid nearly $152 million in dividends to WellPoint. And in 2006, executive compensation for the nine highest-paid administrators in Maine totaled more than $4.3 million, averaging almost $500,000 per executive.

Assistant Attorney General Tom Sturtevant said Monday that Kaufman’s ruling did not rule out the possibility of Anthem realizing a profit, but simply didn’t allow the profit to be built into the company’s rate structure for this year.

“If they reduce administrative expenses” or save money in other ways, he said, Anthem still could realize a profit. Should the court rule in Anthem’s favor, he added, Mainers covered by individual policies likely would see their premiums increase this year.

Health care organizer Ali Vander Zanden of the Maine People’s Alliance said Monday that Kofman’s decision bodes well for Maine consumers.

“It is a very strong decision,” she said, “but it could have gone even further. Even a 10.9 percent increase is too high given the general economic situation.”

A spokesman for Anthem did not return calls Monday afternoon. The company is expected to respond to the Attorney General’s Office’s statement later this week, and a court ruling on the appeal is expected in November.

A public protest of Anthem’s appeal by the Maine People’s Alliance and other groups is scheduled for noon Wednesday on the steps of the Kennebec County Courthouse in Augusta.

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