WellPoint Inc., one of the nation’s top health insurers based in California, announced earlier this year that it would be raising premiums on individual policies by 16.4%. After increased pressure from state legislators and insurance commissioner Dave Jones, however, the insurer has proposed a new increase of no more than 9.8%. Furthermore, the company has heeded Jones’ call for delays on rate hikes and has announced that the increases will not take effect until July.
According to Jones, the rate increases will affect more than 600,000 policyholders in the state. Thanks to WellPoint’s compliance in lowering their proposed rate hikes, customers stand to save some $40 million in premiums.
WellPoint has expressed that it will be exposed to significant losses in revenue this year because the rates will no longer be enough to cover the cost of medical service. Last year, the insurer lost $110 million on individual health insurance policies, according to a company spokesman. The loss was a result of technical errors which had delayed the company from imposing rate increases longer than expected. By agreeing to make changes to their proposed rate increases, the company may have more difficulty in recovering its losses.
Other large insurers have also agreed to scrap their plans to increase premiums. Blue Shield of California, which has originally proposed increases of up to 50%, has abandoned their proposal entirely. Others have made amendments to their proposals which would still result in rate hikes, but not as severe as originally planned.