Sebelius rejects WellPoint’s explanation of Anthem Blue Cross premium increases.

Health Insurance Premium Increases

The Los Angeles Times (2/12, Helfand) reports that WellPoint Inc., “offered a spirited defense” of premium increases “for customers with individual health insurance policies in California,” by its subsidiary Anthem Blue Cross, saying that the increases “reflect soaring medical costs and an exodus of healthy consumers from its ranks.” The firm also said that “less than a quarter” of its policy holders will have rate increases at the oft-cited level of 39%, explaining that “the average will be about 25%.” In response, HHS Secretary Kathleen Sebelius said, “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.”

The AP (2/12, Murphy) reports, “Sebelius had called the increases ‘extraordinary’ and told the insurer in a letter she was disturbed to learn about them. She also has demanded that the insurer answer questions about how much of a profit it will make from the hike.” WellPoint executive Brian Sassi said that “the Anthem Blue Cross unit at the heart of the inquiry lost millions in 2009.”

The New York Times (2/12, A21, Seelye) reports that Secretary Sebelius “declared the explanation inadequate.” The company’s rate increases are said to have “galvanized some Democrats in Washington.”

Politico (2/12, Marr) reports on WellPoint’s letter, adding that “Sebelius shot back that the company’s explanation didn’t jibe with its financial statements.” Reuters (2/12, Heavey) and the Christian Science Monitor (2/12, Grier) also cover the story.

Group reports top insurance companies’ profits are up. The New York Times (2/12, A21, Seelye) reports Health Care for America Now [HCAN] issued a report yesterday saying that “the five biggest insurance companies,” WellPoint, Cigna, UnitedHealth Group Inc., Aetna Inc. and Humana Inc., “had an average profit last year of 5.2 percent — for a combined total of $12.2 billion.” In response, America’s Health Insurance Plans spokesman Robert Zirkelbach said that “historically…the average profit margin for the industry has been relatively low, three to five percent.” HCAN’s Richard Kirsch said that “although the insurance companies lost 2.7 million customers last year during the recession…they raised their premiums so much that they still made substantial profits.” The Seattle Times (2/12, Levey) also covers the story.

Anthem not alone in raising rates. KPBS-Radio San Diego (2/11, Goldberg) reported that while Anthem “is getting a lot of heat,” it “isn’t the only insurer that’s charging higher prices,” as “at least two other companies, Aetna and Health Net, have sent letters out advising members of price hikes.”

Courtesy: AMA Morning Rounds

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