When prices skyrocket too fast, consumers change their patterns and cut back or eliminate certain purchases. When Anthem Blue Cross announced and implemented a 17% plus premium increases on individual and family plans at the beginning of February, many who couldn’t swallow the sticker shock switched to lower benefit plans or cancelled coverage all together.
Demand shift away from Anthem?
The demand shift away from their products must have been pretty healthy because Anthem has negotiated with the California Department of Insurance for a smaller premium increase of 13.9%. More significant is Anthem’s decision to allow people who switched to a lower benefit plan to reinstate the original plan and for those who dropped coverage all together to be reinstated without underwriting.
Calculated loss of members
As usual, Anthem Blue Cross maintained that they needed the hefty premium increase to cover costs. They know that every time they raise prices they will loose a member which in turn reduces revenue. This latest premium increase must have created a greater exodus of members than they had anticipated. A 17% increase on prices to increase revenue is worthless if you lose a disproportionate chunk of your membership base.
Come on back, y’all!
Consequently, in order to balance out the plans that had significant movement away from membership and get some consumers back, Anthem has put out the welcome mat. Another factor may be that they don’t need the bad press and consumer sentiment with only eight months before Covered California, the state health insurance exchange, starts accepting applications.
Anthem Blue Cross communication on the changes