Anthem sues the state of Maine over denial of request to increase rates

Anthem Blue Cross-Blue Shield, the largest insurance company in Maine, is suing the state of Maine over the denial of request to increase insurance rates. Anthem requested an increase in rates by as much as 37.8%, but was denied by Maine Insurance Superintendent Mila Kofman. The company claims the increase in cost is necessary to compensate for growing costs and an increase in the use of health care services. Anthem is a subsidiary of the national insurance company WellPoint, Inc.

Anthem Blue Cross-Blue Shield bought out a non-profit insurance company and has raised premium rates 10 times since. The average individual insurance-payer in Maine pays more than four times as much for insurance as they did ten years ago; before Anthem had a monopoly on the insurance market in Maine. The company controls about 79% of the Maine health care insurance market and provide service for more than 12,000 people statewide.

Anthem isn’t suing for an increase in insurance rates, but instead for a 3% guaranteed profit margin for 2010. Anthem’s rates have gone up 85% in the last 10 years in Maine. (3) A lawyer in the Attorney General’s office claims that going a year without a guaranteed profit will not drain the company and Mila Kofman calls Anthem’s request “excessive”. (3) Mila Kofman denied Anthem’s proposed average rate increase of 18.5% last year, instead approving a 10.9% increase. Anthem retaliated by suing the state and has proposed an average 23% increase for the year 2010. (2)

The state of Maine has no obligation to guarantee profits if the rate increases are discriminatory towards customers or excessive. Anthem is claiming that they are being discriminated against relative to other companies in Maine because another individual insurer in Maine was provided a 3% profit and risk margin for 2010. (1) Anthem claims this violates their equal protection rights under both the federal and state Constitutions. (4) However, there is no statute mandating that Maine provide Anthem or any other insurance company with a guaranteed profit.

President Obama notes rate hikes as a cautionary tale and previews “of coming attractions” (2) unless extensive health reform is executed. Joe Ditre, executive director of Consumers for Affordable Health Care, Maine’s largest consumer-health coalition, says that “health insurer’s profit expectations may have to change”. (2) “Companies are entitled to make some profit…however, it can’t be over the public good” he said. (2)

There have been many public events over the past year regarding Anthem. On March 18 at 5pm there will be protests outside the Cumberland County Courthouse, with speakers raising awareness of the issue. Citizens are being encouraged to attend the actual court case on March 19 to listen to Anthem state their case.

1. Dayen, David. (2009, October 5). WellPoint Sues Maine To Raise Premiums 18.5%. The Seminal. Retrieved from: http://www.seminal.firedoglake.com

2. De Hoyos, Martha. (2009, October 5). WellPoint, Inc. Subsidiary Sues State of Maine for Failing to Guarantee Annual Profit Margin of 3%. Common Dreams. Retrieved from: http://www.commondreams.org

3. Gerencher, Kristen. (2010, February 18). States grapple with health-insurer rate hikes. Market Watch. Retrieved from: http://marketwatch.com

4. Huang, Josie. (2009, October 5). Anthem Sues State of Maine over Rate Hike Request Denial. MPBN. Retrieved from: http://www.mpbn.net

5. Thompson, Adam. (2009, October 8). Health Insurer Sues Maine for Guaranteed Profits. Progressive States. Retrieved from: http://www.progressivestates.org