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Wednesday, February 17, 2010

Anthem set to hike rates in California

Kate Blocher

Staff Writer

Despite the recent epic snowfall in D.C., our congressional leaders and President Barack Obama have continued to work towards a compromise on the health reform bills, in hopes of finding a way to move it across the finish line. Unfortunately, reform has not come quickly enough for many people in California.

Anthem Blue Cross of California recently informed  many of their approximately 800,000 customers who buy individual policies that they will see a sharp rate increase in the coming months. According to the Los Angeles Times, some individuals were told to expect a rise as large as 39 percent, and this on top of past rate hikes!

To say this is unfair to policyholders would be an understatement, especially since WellPoint Incorporated, Anthem's parent company, made a profit of $2.7 billion in the last quarter of 2009. Luckily, officials at both the state and federal level took notice of Anthem's dramatic rate hike and took swift action to investigate-and hopefully halt-the increase.

California Insurance Commissioner Steve Poizner announced that he will hire an independent actuary to scrutinize the planned increase, and both the House Energy and Commerce Committee  and Health and Human Services Secretary Kathleen Sebelius launched inquiries.

Anthem cited the economy and the rising health costs as explanation for the dramatic rate hike. But, as Jonathan Cohn explains,

"[t]his is not, to be clear, just another story of medical care getting more expensive because of technology, over-treatment, monopoly pricing, or any of the other familiar drivers of system-wide costs."

According to Cohn, WellPoint's medical expenses rose by only around 9 percent this year, well below the increase expected by inflation. Further, Anthem claimed the economy is forcing many young and healthy individuals to either drop coverage or forgo buying it altogether, resulting in higher premiums for everyone else. If this is the case, there couldn't be a stronger argument to reform our health care system to one in which everyone is offered affordable, quality insurance that they can maintain. The health reform bills currently being debated would create such a system.

Amidst pressure from consumer advocates, Commissioner Poizner, and even President Obama, Anthem Blue Cross announced late last week that they were delaying the rate hikes. This is a step in the right direction, but a delay simply means the rate hike will be put off until another day, and consumers will still have to shell out higher prices for the same coverage.

Health and Human Services Secretary Kathleen Sebelius put it best in her response to Anthem's explanation for their rate increase:

"Without comprehensive reform, fewer people will be able to afford health insurance and Anthem's decision to raise their rates only demonstrates the urgent need for real reforms that fix our broken health insurance system. Reform will end the worst insurance company practices and put doctors and patients-not insurance companies-in charge of medical decisions. If we fail to implement reform, insurance companies will continue to prosper while families will continue to struggle."

In order to protect consumers, to protect the American people, we must finish health reform.