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 after being denied permission to increase insurance rates. Anthem requested a rate increase 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 Maine’s insurance market. The company controls about 79% of the Maine health care insurance market and provides service to more than 12,000 people statewide.

Anthem is suing after being denied 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 granted Anthem an average 10.9% rate increase last year, rather than Anthem’s proposed rate increase of 18.5%. Anthem retaliated by suing the state and has proposed an average 23% increase for the year 2010. (2)

But the citizens of Maine are saying no to Anthem. About 100 people turned out at the Cumberland County Civic Center to protest Anthem on March 18. A chiropractor practicing in Waldoboro said “My business has already been hit hard by the recession. If Anthem increased rates even more then less people would come see me for treatments and I don’t think my business-an 18 year-old, family business-will survive. Maine citizens can’t pay any more for insurance”.

The federal government is pointing at Anthem and other WellPoint subsidiaries requesting rate hikes in states like California as even more reason to create universal health care. President Obama notes rate hikes as a cautionary tale unless extensive health reform is executed. A veteran who receives free medical care through Department of Veterans Affairs Medical Center (VA) Togus in Augusta says “I go there for medicine I need and I’m not going to be able to get this medicine if rates increase even more. I need this stuff, but Anthem doesn’t care”.

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’s claim is that 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.

Joe Ditre, executive director of Consumers for Affordable Health Care, Maine’s largest consumer-health coalition, says “health insurer’s profit expectations may have to change”. (2) Anthem made $4.7 billion profit in 2009 and is expecting even larger returns in 2010. “Companies are entitled to make some profit…however, it can’t be over the public good” Ditre said.

The Bureau of Insurance has received several hundred letters, e-mails and phone calls from Maine citizens regarding the proposed rate increases. Mila Kofman will issue a decision on Anthem’s case after a public hearing in April, where Anthem will make its case for rate increases.

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