Anthem Blue Cross claims that rising medical costs are the culprit, but there’s no way that underlying medical costs are going up at that rate. California’s individual market must be suffering from adverse selection.

What’s causing it? My speculation is that California’s new regulations on rescission are one cause of the spiral. I’ve written a long thread on the topic. Previously, an applicant for individual coverage could lose her policy if she had not told the truth about her health status on her application. California changed the rules to require the carrier to prove willful misrepresentation by the applicant – even with objective evidence that she had neglected to fully inform the carrier of a condition. If an applicant “forgets” or doesn’t “understand” what her health condition is, the carrier will not be able to rescind a policy that was written with incomplete information.

I’ve heard from insurance agents that policies with maternity benefits are suffering the biggest increases. That’s a pretty strong signal of a selection problem. I wish Anthem Blue Cross would give us the full story.


This blog post originally appeared on StateHouseCall.org.