Anthem Blue Cross and Blue Shield made a 16 percent profit in 2005 on the fledging Dirigo Choice insurance program subsidized by the state to help insure lower-income residents – a revelation that’s raising eyebrows in light of the company’s double-digit rate hike request for the plan next year.

But Anthem said that profit was all made in the small-business group market and not on individuals, who are increasingly making up more of the Dirigo Choice enrollment.

During the first year of the program, when the state limited the number of individuals who could come in versus employees of small businesses, Anthem made 21.5 percent profit on the small-group rates, but under half of a percentage point on individuals, according to reports filed with the state’s Bureau of Insurance. Overall, the company had a 15.8 percent, or $3.6 million, profit on Dirigo Choice before federal taxes.

Next year, Anthem wants anywhere from an 18 to 23 percent hike for individuals’ rates, based on whether participants are required to pay more co-pays. That request is currently being considered by the state’s superintendent of insurance. A hearing was held last week.

A 5 percent hike for small businesses enrolled in the Dirigo Choice plan, whose employees will be paying the additional co-pays, does not need state approval and will take effect in 2007.

Dirigo Choice currently covers just under 12,500 people, and many receive state help to pay their premiums based on financial need.

The state will spend an estimated $44 million to subsidize those premiums next year, but Anthem handles and pays the insurance claims and sets the rates, within the confines of state insurance law.

Mark Ishkanian, Anthem spokesman, said the request for a double-digit hike for individuals insured by Dirigo Choice is to allow the company to make a profit on that line of business. He said the individuals insured under Dirigo Choice have higher claims than small groups, and therefore are less profitable to insure.

Anthem made the same case in its non-subsidized, commercial plan for individuals, known as Health Choice, which currently covers 29,500 people in the state. The company lost money on the product this year, and came in with a 20 percent rate hike request for next year that was ultimately reduced to just under 17 percent by Alessandro Iuppa, insurance superintendent, last month.

Joe Ditre of Consumers for Affordable Health Care has been calling on Anthem to base its rates on overall profitability in the state, not just on product lines serving individuals, small or large groups.

On Monday, he said he could not support changes in benefits for Dirigo Choice members to lower the overall cost of the plan in light of the company’s profits in 2005. Just what the company made on Dirigo Choice in 2006 won’t be known until March of 2007, when its next profitability report is due to the insurance bureau.

Ishkanian said the individual side “does not look rosy” for 2006, but it is still not clear how that will be balanced out on the small-group side of the Dirigo Choice membership.