Lynda McManus has become an expert on the high cost of health care. All it took was opening a couple of letters mailed to her Danville home.

In November, Anthem Blue Cross notified her that her monthly insurance premiums would be increased from $554 to $663. Since then, she was told the cost would go up to $800 in May.

Her business is pianos and piano lessons, not finance, but she didn't need a degree in higher math to recognize back-to-back 20 percent rate hikes and wonder what she'd done to earn a kick in the teeth. She hadn't been sick, she wasn't on medication and her individual policy isn't top-of-the-line. It has a $3,500 deductible.

"I have my own business," she said. "I've raised my rates one time in 13 years -- last year, we increased lessons by $1.50. What kind of business raises its rates 40 percent in seven months?"

Anthem officials are understandably defensive about being labeled profiteers. In fact, a corporate spokesman didn't want to be quoted, which is sort of the point of being a corporate spokesman.

Anthem's defense

He explained, in general terms, that rising medical costs are to blame -- not insurers -- and he emailed a graphic highlighting facts about Anthem's individual policies: Anthem exceeds the Affordable Care Act requirement that 80 percent of every dollar in premiums be spent on medical benefits, and its 13.9 percent average rate increase in 2013 is neither the highest nor the lowest in the state.


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So what did McManus do to earn her kick in the teeth? For one thing, she turned 61. Rates increase as policyholders age, and 60 marks the entrance to the Land of Bloated Premiums. That wasn't in the email, but my timid spokesman acknowledged as much.

Still, that's not the whole story, according to Nancy Kincaid of California's Department of Insurance. She said Commissioner Dave Jones has found many rate hikes to be excessive. Double-digit increases have been common in recent years.

Said Kincaid: "Insurers will tell you rate hikes are because of the cost of medical care, but health care inflation has been running at 3 and 4 percent. So why are rates going up 10, 20, 30 percent?"

Among the justifications are anticipated increases in claims. Insurers can't pay out if they don't take enough in. The thing is, those projected outlays often exceed reality.

What of the so-called "80 percent" requirement? There are gray areas.

"Insurance companies are required not to spend more than 20 percent on administrative costs," Kincaid said, "but not included in that is the total profit. For Anthem Blue Cross, their return on equity last year was about 25 percent. The commissioner's argument is if they're returning 25 percent, why do they need to raise premiums?"

Anthem is hardly alone. Jones found a recent 11.7 percent hike by Blue Shield to be "unreasonable." Such findings are the extent of his power. While he has some control over auto and homeowners insurance rate hikes, it doesn't extend to health care.

Public pressure

Instead, he applies public pressure, with mixed success. He persuaded United Healthcare to lower its rates. He has been unable to stop Anthem from collecting federal fees and taxes on group policies that won't go into effect until 2014.

Meanwhile, McManus looks for another insurance plan, perhaps with a higher deductible. It's like seeking dry ground in the middle of the sea.

"I know I'm not alone in this," she said, "because any time I mention health insurance costs to anyone, they say the same thing."

Contact Tom Barnidge at tbarnidge@bayareanewsgroup.com.