California insurance regulators cleared the way Wednesday for Anthem Blue Cross to implement scaled-back rate hikes after a previous increase was canceled amid an uproar over its size.

Anthem said it intends to put the new rates — averaging 14% and as high as 20% — into effect Oct. 1 for nearly 800,000 individual California policyholders.

Regulators also allowed one of Anthem’s nonprofit competitors, Blue Shield of California, to move ahead with rate increases — averaging 19% and as high as 29% — for 250,000 individual policyholders.

Anthem backed off its initial plan to increase premiums as much as 39% in March after consumers, regulators, lawmakers and even President Obama criticized it, and after a consultant hired by state regulators found major math errors in its filing.

The state Insurance Department said Wednesday the six-month delay saved policyholders $184 million, although Anthem, the state’s largest for-profit insurer, put the figure at no more than $150 million.

“These savings were a clear benefit to Blue Cross’ policyholders,” said Deputy Insurance Commissioner Byron Tucker.

Kristin Binns, a spokeswoman for Anthem’s Indianapolis-based corporate parent, WellPoint Inc., said it would notify policyholders of the rate increase in the coming days. This fall, Anthem plans to submit its 2011 rates to the Insurance Department in hopes of implementing them early next year.

“Anthem is pleased that the department has posed no objections to our individual rate filings, and we look forward to continuing to serve consumers in California” Binns said.

Anthem policyholders who criticized the company over its original rate plan said the smaller increases would still be a burden.

“It’s already verging on completely unaffordable,” said Mary Feller, 57, of Northern California, who had faced a 39% increase for herself and her husband before the rates were trimmed. “If our insurance keeps going up at this rate, we’ll lose it.”

Denis Robinson of the San Fernando Valley said he had lost faith in Anthem but remains with the company because he has no alternative. Robinson, 63, said he already pays nearly $9,000 a year for insurance and faced a 26% increase under Anthem’s initial plan.

“I don’t know what my rate increase is going to be and whether it’s related to anything reasonable,” he said. “I’m in the dark.”

Regulators said they reviewed Anthem and Blue Shield’s rate filings to ensure they complied with state law, which requires insurers to spend at least 70% of their premiums on medical care. Both insurers met the mark, officials said. As such, their rates were allowed to proceed.

“We are not blessing these rates,” said Tucker of the Insurance Department.

Regulators in California have no authority to block increases if insurance companies meet the 70% threshold, although state lawmakers are now considering legislation that would require insurers to get the Insurance Department’s approval before raising premiums.

Although the two companies had delivered reams of documents for regulators to study in recent months, Blue Shield had grown frustrated over the delay of its July 1 rates, which has cost the company more than $30 million.

Blue Shield Chief Executive Bruce Bodaken wrote to Insurance Commissioner Steve Poizner this week to voice his displeasure with the drawn-out process and threatened to implement its rates Oct. 1 regardless of the state’s conclusions.

On Wednesday, a Blue Shield spokesman said the company looked forward to moving ahead with its plan. “We wish the increases were smaller, but the cost of medical care for our members keeps rising dramatically,” spokesman Tom Epstein said. “These increases are necessary to cover those costs.”

duke.helfand@latimes.com