LOS ANGELES – California health insurer Anthem Blue Cross canceled rate hikes of up to 39 percent for thousands of California policyholders Thursday after state regulators said the plan was “seriously flawed.”

The move came after a consultant to state regulators found that Anthem overstated future medical costs used to justify increases averaging 25 percent for many of the company’s 800,000 customers with individual policies. Correcting the flaws could drop the rate hikes to an average of 15 percent, the outside analyst said in a report.

“There will be no rate increases at this point,” Insurance Commissioner Steve Poizner said. “The application was in error. There were all kinds of methodological mistakes.”

“It’s wonderful news,” said Denis Robinson, a Los Angeles lawyer whose rates were set to rise 26 percent. “I’m not OK with a rate increase that is so extraordinary, along with a promise that they may rise again within the year.”

Based in Los Angeles, Anthem is the largest for-profit health insurer in California and a unit of WellPoint Inc., the nation’s biggest health insurance company by membership.

Anthem’s planned rate increase provoked intense criticism from consumers, regulators and elected leaders in Sacramento and Washington, including President Obama, after the company began notifying customers in January.


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