KHN Morning Briefing

Summaries of health policy coverage from major news organizations

Anthem Blue Cross Postpones California Rate Hike

Anthem Blue Cross is agreeing to postpone until May a planned 39 percent rate hike for insurance policies that would have taken effect March 1. Democrats have decried the proposed increase, saying it exemplifies issues being raised in the health care overhaul debate, The New York Times reports. "With health care negotiations stalled in Washington, the Obama administration is seizing on the seething fury felt by … nearly 700,000 other Anthem customers in California who have received notices of increases that average 25 percent. About a quarter of them are seeing leaps of 35 percent to 39 percent, the company said, at least four times the rate of medical inflation." The Times reports that the "the confrontation has also reinforced an emerging shift of focus in Washington from the need for universal coverage to the need for serious cost control. And it brought into clear relief the deep rift between the administration and the insurance industry concerning a central question: whether such unsustainable pricing is driven by the bloodless economics of risk or a corporate culture of greed" (Sack, 2/15).

KCBS reports that Anthem's parent company WellPoint "said the planned rate increases reflect soaring medical costs and an exodus of healthy customers from its ranks. ... If the company is found not to be in compliance, (California insurance commissioner Steve) Poizner has two options. 'I can direct Blue Cross to reduce their prices. If they refuse to reduce prices, then I have the ultimate capability and authority to withdraw the license that they have to actually sell these products'" (Seelig, 2/13).

The Associated Press: "Anthem's plan comes as more people lose employer-sponsored health insurance - and more insurers start raising rates on individual customers. ... Consumers in at least three other states who buy their own health insurance are getting hit with premium increases of 15 percent or more. The Anthem Blue Cross plan in Maine is asking for increases of about 23 percent this year for some individual policyholders. Last year, they raised rates up to 32 percent" (Johnson, 2/13).

The Associated Press/Los Angeles Times report in a separate story that rhetoric from both sides of the argument for or against the rate hikes "distorts the reality. ... It's true that hikes like the one by WellPoint Inc. apply only to people who buy individual insurance and are unlikely to spread to the majority of Americans covered through their employers. But such hikes also hit a huge number of Americans who mostly went unmentioned in the furor - the 46 million with no insurance at all. … Raise prices, and people without insurance are even less likely to buy it - healthy people especially. Meanwhile, older and sicker customers pay more and more, running up high health bills in a shrinking pool." Only 5 percent of Americans have individual insurance (Geller, 2/14).

Meanwhile, in a column for the Los Angeles Times, David Lazarus writes that small business also feel the pinch. "But the financial hardship has been similarly tough for small businesses that offer health coverage to workers. Many small businesses have seen rate increases of as much as 30% over the last year, insurance brokers say. Passing those costs along to customers is frequently impossible. Most small-business owners know they'll just lose sales if they jack up prices for goods or services" (Lazarus, 2/15).

In Indiana, state officials with the Department of Insurance said last week they are confident they have the "regulatory process necessary to make sure the premium increases faced by those with individual health-insurance plans are justified," The Indianapolis Star reports. "The department has received six formal complaints from Anthem customers about premium increases on individual plans in 2010. Those complaints will trigger further review of those rate hikes, which already have been approved by the state." WellPoint is based in Indianapolis. "The Indiana Department of Insurance said that as part of its standard review of rate increases, it uses an independent actuary to make sure those increases are justifiable" (Lee, 2/13).

Previous related news summaries:

Administration Rejects Anthem Blue Cross' Defense Of Premium Hike (2/12)

WellPoint Defends 39% Premium Hike In Letter To Sebelius (2/11)

Congress To Investigate 39 Percent Premium Hike By California's Anthem Blue Cross  (2/10)

Anthem Blue Cross 39 Percent Rate Hike Draws Ire Of Federal, Calif. Regulators (2/9)

Anthem Blue Cross Of California Raises Rates As Much As 39 Percent (2/5)

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