No rate increase for Anthem Blue Cross of Calif.

Anthem Blue Cross of California withdrew a proposal to raise premium rates up to 39% on individual policyholders.

The WellPoint subsidiary submitted to the California Department of Insurance last November its intent to raise rates on 800,000 California members by an average of 25% and up to 39% starting in March. The rate increase drew fire from the Obama administration and spurred congressional hearings in February .

Anthem Blue Cross suspended the rate increase until May while an independent actuary, selected by the state, conducted a review of the rate application.

The actuarial firm, Axene Health Partners, found five errors in the insurer's rate application, including inaccurate trend information for forecasting future medical costs, according to summary released by the state.

California Insurance Commissioner Steve Poizner called the errors “substantial.”

Anthem Blue Cross of California will re-file its rate application sometime in May. The Woodland Hills-based insurer said in a statement that a requirement in the new health reform law effective January 2011 that insurers spend at least 80% of premium dollars on medical care also spurred the decision to withdraw the proposal. Anthem must give customers at least 30 days notice to raise rates, and until further notice, the current rates will remain unchanged.

“We think it is in the best interests of our customers and those seeking insurance coverage in California to refile our rates, taking into consideration healthcare reform law and the most recent cost and utilization information available,” said Brian Sassi, president and CEO of WellPoint's consumer business unit, in a statement.