LOS ANGELES (CN) – Anthem Blue Cross raised rates to force policyholders into lower-benefit and higher-deductible health plans, a consumer group claims in class action in Ventura (Calif.) Superior Court.
Consumer Watchdog says Anthem forced its older and sicker policyholders – those unable to switch carriers because of pre-existing conditions – to pay higher premiums until they eventually break down and accept inferior coverage or drop the plan altogether.
Plaintiff called the practice a “Death Spiral,” “a practice in which a health plan announces that it is closing a block of business (i.e. will no longer offer a certain type of plan contract to new enrollees, or has priced that plan contract to make it uncompetitive) and raises the rates paid by those remaining in the now-closed block of business until they can no longer afford coverage.”
The plan “thus effectively directs healthier individuals … to switch to other coverage, with different and reduced benefits that is more profitable for the health plan,” the lawsuit states.
Enrollees with pre-existing conditions, however, are barred from switching to new coverage and are thus “trapped in the closed block. Over time, rates increase dramatically for those who retain the older coverage, as they become older and more likely to file claims. Eventually, many enrollees are priced out of coverage and frequently left uninsured,” the lawsuit states.
Anthem came under scrutiny earlier this year for raising rates of its 800,000 policyholders by as much as 39 percent.
Another lawsuit was filed against Anthem in February in San Mateo County Superior Court, accusing the insurer of unfair competitive business practices.
The lawsuit was filed by Harvey Rosenfeld.