Anthem Blue Cross settles class action alleging unfair premium hikes

Posted on: June 28th, 2011 by Steve Larson

California health insurer Anthem Blue Cross has settled a class action lawsuit by agreeing to limit rate increases for 122,000 policyholders whose plans were closed to new customers.  These policyholders often could not change plans, because their medical histories were such that they could not obtain other insurance in other plans.  After the settlement, affected policyholders for the first time would also be able to switch plans without having their medical histories reviewed.

Consumer groups had accused the state’s largest for-profit health insurer of closing some insurance plans to new members and then forcing existing customers into a financial “death spiral” by dramatically raising rates without offering comparable options as required by state law.  Anthem policyholders and healthcare advocates said the practice often trapped older customers or those with preexisting health conditions in policies they could not afford but also could not leave.

Under the settlement, those policyholders who stick with their closed plans will see rate hikes no more than the average for all closed plans.

A judge must still give final approval to the settlement in August.