The letter from Anthem Blue Cross the day before Thanksgiving pushed Walter Warner onto the wrong side of a seesaw. Proposed premium rate increases mean that as of February he could pay more for health insurance than for his mortgage.
"Agonizing," said the 62-year-old Westlake Village retiree. "Very, very frustrated."
Warner may be getting off easy with his increase of 13.8 percent. Anthem, the largest for-profit health insurer in California, proposes increasing rates for 744,000 people covered by individual policies an average of 17.5 percent. Some people would face increases of nearly 25 percent.
Aetna's rates for 68,766 people with individual policies could rise an average of 18.8 percent in April, according to California Department of Insurance filings. Health Net already increased prices an average of 14.1 percent for 30,349 Californians in October, raising rates 12.5 percent for other policies affecting 16,264 people.
The individual policies affected include people and families not covered by work or government. State regulators are reviewing the proposed increases from Anthem and Aetna. If they find the premiums excessive, they can try to persuade insurers to scale back, but they have no power to reject proposals.
Insurers attribute the planned increases to rising medical costs, healthy people dropping their policies and bare or nonexistent profit margins on individual policies. Consumers and industry experts debate the role of the federal health care overhaul in pushing up prices. Regulators say they need more power.
Warner buys some arguments and rejects others. Anthem's notification to charge him $1,536 each month spurred him to do some writing of his own. He sent missives to the California Insurance Department, Sen. Dianne Feinstein, Health & Humans Services Secretary Kathleen Sebelius and President Barack Obama.
"The whole thing gets me mad," he said, adding that three rate increases over two years threaten to break his budget. "It's gone to a point where something has to give, and that's where we're at."
Anthem officials said costs and use of their individual policies will increase 13.5 percent in the next year. They said healthy people are dropping their policies, leaving a pool of insured people who need more health care and make more insurance claims.
Even with the rate increases, Anthem projects it would lose money in the individual market in 2013, said spokesman Darrel Ng. He cited a report from the California HealthCare Foundation that says Anthem's profit increased about 4 percent in 2010.
Anthem's parent company, WellPoint, recorded return on equity — another way of measuring profit — at an average of nearly 14 percent over five years, according to Forbes.com. Insurance Department Commissioner Dave Jones also cited return on equity measurements, suggesting the 4 percent estimate is misleading.
While declining comment on Anthem and Aetna proposals still under review, Jones said some insurers have provided inaccurate numbers in the past.
"In numerous filings from health insurers, generally we have seen over-projections of medical costs and utilization and other factors," he said.
Ng said independent actuaries review Anthem's rate filings to make sure they are accurate.
Other insurers deliver the same message as Anthem. Rising rates in the individual market are driving the increased costs of hospitalizations, doctors' visits and medications.
"Profit margins of health plans including Health Net are extremely low ... in the low single digits," said Brad Kieffer, spokesman for Health Net of California. "It's not about increasing profits. It is a reaction to the continuing escalation of medical costs."