Anthem Blue Cross withdraws 39% rate request, saving Californians

health care reform law
health care reform law

With the threat of having to rebate customers if they make too much profit, Anthem Blue Cross withdrew its request for premium increases as high as 39%. That's great news for an estimated 800,000 Californians who buy individual health insurance policies from Anthem Blue Cross, a subsidiary of WellPoint.

The decision was not because Anthem cared about consumers. Instead, it was because under the new health care law, companies will have to rebate customers beginning in 2011 if they don't spend at least 80% of their premiums on health care. This new rule requires commercial insurers to maintain what's called an 80% "medical loss ratio." That loss is what is actually spent on medical care. The other 20% can be spent on salaries, overhead and profits.