Embattled health insurer Anthem Blue Cross is reviving its plan to raise rates for tens of thousands of California policyholders, some of whom could see their premiums rise as much as 20%.

California’s largest for-profit insurer submitted new rates Wednesday amid pressure to scale back increases of as much as 39% that had provoked fury from consumers, lawmakers and even President Obama.

That initial attempt to hike premiums in the spring turned Anthem into a national target for outrage over insurance company profits. And it reenergized the Obama administration’s flagging efforts to pass landmark healthcare legislation. The Woodland Hills insurer backed down after an independent consultant for California’s insurance commissioner found numerous errors in its rate plan.

Eager to avoid another public backlash, Anthem and its corporate parent, Indianapolis-based WellPoint Inc., now are seeking a maximum increase of 20%, with an average hike of 14%. The original proposal called for an average increase of 25%. The new rates would take effect Sept. 1.


WellPoint defended the rising premiums as necessary and unavoidable, saying Anthem would still lose more than $100 million this year on individual health insurance policies sold in California even though 600,000 of its customers would be paying more.

“The rates do not cover our costs and are not going to be sustainable over the long term, but it made sense to move ahead,” said Brad Fluegel, WellPoint’s chief strategy officer. “Given the environment, it was in the best interest of everyone to get this behind us and move forward.”

But policyholders and consumer advocates who assailed Anthem’s initial rate hikes also blasted the new increases as excessive, and fear that Anthem will try to recoup any losses with subsequent rate increases. Company officials said Wednesday they expect a new round of rate hikes in the first half of 2011

WellPoint has posted huge earnings so far this year. The company made $877 million in the first three months of 2010, a 51% increase from the same period last year.


It also boosted compensation in 2009 for Chief Executive Angela F. Braly to $13.1million, a 51% increase from a year earlier, according to a company filing.

“Why can’t they start thinking about people rather than profits,” asked Mark Weiss, a Century City podiatrist whose individual insurance policy was set to rise 35% before Anthem canceled the increases in the spring.

Consumer advocates and some lawmakers said the Anthem controversy pointed to the need for legislation that would give regulators more authority over rates.

California is one of a handful of states where health insurers can raise rates without state approval.


“It is clearly time for stricter oversight of the methods health insurance companies use to calculate premium rate increases,” U.S. Sen. Dianne Feinstein (D-Calif.) said.

The new healthcare law will provide access to health coverage for an estimated 32 million uninsured people but will do little to control rate hikes, simply giving federal officials the ability to review “excessive” increases.

Anthem’s earlier misstep has made it something of a corporate outcast in Sacramento and Washington. Lawmakers in both capitals hauled the chief executives of Anthem and WellPoint before legislative hearings to justify the rising premiums.

Obama singled out Anthem on several occasions, including on Super Bowl Sunday, describing the Anthem increases as “a portrait of the future if we don’t do something now.” The administration and healthcare analysts have credited the company’s attempted rate hike with reinvigorating the president’s effort to pass healthcare reform.


“The Anthem rate increases gave the legislation the final push,” said Shana Alex Lavarreda, director of health insurance studies at the UCLA Center for Health Policy Research.

Anthem’s new plan comes as California regulators step up scrutiny of insurers offering insurance to individual policyholders in the state, where about 2.5 million people buy their own insurance because they do not receive coverage through employers.

California Insurance Commissioner Steve Poizner has hired an actuary to study rate filings submitted by Anthem, Aetna Inc. and Blue Shield of California. Poizner announced Wednesday that he was making the filings public on the insurance department’s website. A fourth insurer, Health Net Inc., also will undergo additional scrutiny once it files new rates.

The state consultant who found significant calculation errors in Anthem’s paperwork later identified math mistakes in Aetna’s application, leading the Connecticut-based insurer last week to kill its plan for an average 19% rate hike for 65,000 individual policyholders in California.


WellPoint executives said they took several steps to ensure the accuracy of their new filing, adding internal reviews and hiring an outside consultant to evaluate it.

“We’re confident that those errors have been corrected,” said Brian Sassi, president and chief executive of WellPoint’s consumer business unit.

“Our intent is to provide healthcare coverage to individuals and groups in the state of California,” he said.

duke.helfand@latimes.com