AUGUSTA – With health insurance already priced well beyond the reach of many Maine residents, the state Attorney General’s Office hopes to pare down a rate increase proposed last month by Anthem Blue Cross and Blue Shield of Maine.

At a public hearing in Augusta on Friday, Assistant Attorney General Christina Moylan grilled Anthem executives in an effort to demonstrate that the company’s request should be revised.

Last month, Anthem informed the approximately 36,000 policyholders enrolled in its HealthChoice plans for individuals that it would seek an average 14.7 percent increase in monthly premiums.

The changes range from a decrease of 4.2 percent to an increase of 106 percent, depending on the specifics of the policy. The steepest increases would fall on consumers with already-pricey, low-deductible plans.

Anthem controls more than 90 percent of the state’s nongroup insurance market.

Nine Anthem customers submitted verbal testimony Friday to Insurance Superintendent Alessandro Iuppa.

Wendell Fletcher, 62, of Portland testified that his current $584.75 monthly insurance payment would increase to $879.40 if the increase were approved. Living on a fixed annual income of $15,600, Fletcher said he would be forced to drop coverage. “I think a 50 percent increase is obscene,” he told Iuppa.

Filmmaker and educator Donna Warren said her premium would almost double to $900 a month. “What is enough profit? What is too much profit? And at the expense of what?” she asked.

Recently elected state Rep. Kenneth Lindell said his family’s coverage would jump from $1,400 to $2,200 a month. “This situation is, quite frankly, out of control,” he said.

Anthem filing documents say the company needs to correct premium revenues for an unexpectedly high number of low-premium, high-deductible policies.

These plans unfairly subsidize the more comprehensive policies popular with the chronically ill and other heavy users of health care services, according to the company.

But in prepared opening comments at Friday’s hearing, Moylan told Iuppa that Anthem’s request is out of line. The company’s projected costs are exaggerated, its targeted profits excessive, and a new “risk margin” charge unfounded, she said.

Anthem also is attempting to evade the state’s long-standing “community rating” requirement by creating three separate risk pools with the HealthChoice products for the purpose of calculating rates, Moylan maintained.

Moylan pointed out that at the end of 2003, Anthem’s Maine affiliate had $136 million in “surplus funds.” In 2002, the surplus was $92 million.

Because the company doesn’t have to cover lower-level charges for people with catastrophic coverage, Anthem actuary William Whitmore acknowledged under questioning, “profits have been higher than targeted.”

Whitmore explained that premium calculations are based on projected enrollment trends and risk assessments, and are not adjusted downward to reflect past surpluses.

Iuppa, who must approve the proposed increases before they can be implemented, is charged with ensuring the new premiums are not “excessive, inadequate or unfairly discriminatory.” He would not speculate as to when he might reach a decision.

The insurance chief is barred by state regulations from discussing the particulars of the case with the news media, but said he has received more than 150 letters from Anthem subscribers protesting the changes.

If approved, Anthem’s rate increase will take effect in January 2005.