Administration rejects Anthem Blue Cross' defense of premium hike

WellPoint Inc., the parent company of Anthem Blue Cross of California, is defending its rate hike for customers with individual health insurance, but critics, including the Obama administration, are dubious.

"In a letter to the administration, health insurance giant WellPoint Inc. of Indianapolis said that increases of as much as 39%, set to take effect March 1, reflect soaring medical costs and an exodus of healthy consumers from its ranks," the Los Angeles Times reports. "Company executives said that less than a quarter of affected Anthem customers in California will see rate increases of 35% to 39%. The average will be about 25%, while some customers will see rates fall, they said." The Times quotes HHS Secretary Kathleen Sebelius: "It remains difficult to understand how a company that made $2.7 billion in the last quarter of 2009 alone can justify massive increases that will leave consumers with nothing but bad options. High healthcare costs alone cannot account for a premium increase that is 10 times higher than national health spending growth" (Helfand, 2/12).

The Wall Street Journal: "Brian A. Sassi, president of WellPoint's consumer business, said in his letter to Ms. Sebelius that the increase only affects the individual market, about 10% of its business in California. He said that despite an overall profit, the company, which does business as Anthem Blue Cross, suffered a 2009 loss in that market in California. Mr. Sassi also said rates are rising because healthy people are choosing not to buy coverage during the economic slowdown, leaving a sicker pool of customers. He said requiring people to buy health insurance would mitigate the problem" (Meckler, 2/12). 

The New York Times: Sebelius' "comments came on a day when a health care advocacy group reported that WellPoint and the four other biggest health insurance companies had collectively reported a record profit for 2009, even as they covered fewer customers." The report found that "the five biggest insurance companies had an average profit last year of 5.2 percent — for a combined total of $12.2 billion. This was an increase of $4.4 billion, or 56 percent, compared with 2008, according to the report, prepared by Health Care for America Now, a coalition of liberal and labor groups advocating for the passage of an overhaul of the health care system" (Seelye, 2/11).

The Los Angeles Times, in a separate article: "Industry representatives criticized the report's approach, pointing out that 2008 was a bad year financially across many industries. 'It is disingenuous to look at the profits at one company today compared to where it was in the depth of a recession,' said Robert Zirkelbach, a spokesman for America's Health Insurance Plans, the industry's Washington-based lobbying arm" (Levey, 2/11).

The Christian Science Monitor: "Calling the WellPoint decision 'reckless,' Senate majority leader Harry Reid (D) of Nevada on Thursday said it showed why healthcare reform is needed.
'We don't have to let greedy health-insurance executives drag down our future,' Senator Reid said. President Obama made a similar point, using less-harsh language, at his Tuesday press conference" (Grier, 2/11).

The Associated Press: "To President Barack Obama, [the rate hike is] Exhibit A in his campaign to revive the health care overhaul. ... Whether the Anthem Blue Cross dispute "will be enough to re-ignite the sputtering health care legislation, remains uncertain... The rate hike shock, however, could help Obama make his case that Republicans need to come to the table on health care. GOP leaders, who want to start talks over from scratch, are going reluctantly to the Feb. 25 health care summit convened by the president" (Murphy and Alonso-Zaldivar, 2/11).

KHN's Daily Report has covered the coverage throughout the week regarding Anthem's planned rate hikes, including Congress' decision to hold hearings on the topic and reports about the initial rebuke by Health and Human Services Secretary Kathleen Sebelius.