Original Link: http://www.forbes.com/feeds/ap/2009/10/07/business-financials-financial-impact-us-anthem-appeal-maine_6977377.html
By CLARKE CANFIELD
Demonstrators on Wednesday backed Maine's insurance superintendent for rejecting a request from the state's largest private health insurer seeking an 18 percent rate hike for its individual insurance plans.
Mila Koffman last spring denied Anthem ( ATH - news - people ) Blue Cross and Blue Shield's proposed rate increase as being excessive. She approved a revised request for a 10.9 percent increase, which provided for a zero percent profit margin.
In response, Anthem filed a complaint in Kennebec County Superior Court in August appealing the denial of the higher rate increase. Anthem said a regulatory decision allowing for no profit was unprecedented, inadequate and fundamentally unfair.
An estimated 100 demonstrators gathered outside the Augusta courthouse on Wednesday to protest Anthem's appeal. Organizers said Anthem is in sound financial health, earning annual profits in Maine of $55 million to $100 million from 2004 to 2008.
"This is a perfect example of the problems with our health care system today. They were granted a 10.9 percent rate increase, and that's not enough for them," said Greg Howard of Change that Works, an organization that supports health insurance reform and helped organize the demonstration.
Anthem, a subsidiary of Indianapolis-based WellPoint ( WLP - news - people ) Inc., submitted a request last winter seeking an average 18 percent rate increase for its four individual health care insurance products, affecting about 12,000 policyholders in Maine. In all, Anthem has 400,000 policyholders in Maine for all its health insurance plans.
The rate increase request reflected the medical risks of doing business in Maine, company officials said. In its suit, the company said Maine has high rates of asthma, heart disease, diabetes and other chronic illnesses, high numbers of smokers and a restrictive regulatory environment.
"Unfortunately, the individual market premiums are merely the symptoms of a larger underlying problem in Maine's individual market: rising health care costs," said spokesman Chris Dugan.
In response to Anthem's lawsuit, Attorney General Janet Mills filed a 38-page brief two weeks ago detailing Anthem's revenues, profits and profit margins in Maine. Anthem, she said, can still easily make a profit on the lower rate increase.
In these tough economic times, she said the average individual health plan policyholder pays about $6,000 in premiums each year with deductibles of $7,250.
"They want a guaranteed profit of a certain minimal amount on the backs of ratepayers who are carrying these health insurance plans, mainly small business owners, sole proprietors, restaurant owners, loggers, farmers - the backbone of our economy," Mills said Wednesday.
Oral arguments in the case are expected in November, Mills said.