KHN Morning Briefing

Summaries of health policy coverage from major news organizations

Health Companies Criticized For Deceptive Marketing While Anthem Rate Hikes Continue To Draw Attention

"Minnesota's attorney general on Wednesday sued two Texas companies she said falsely represented their discounted health care plans as medical insurance to thousands of customers," The Associated Press/Washington Post report. "The companies used words such as 'premium' and 'copay,' and promised to cover 80 percent of medical expenses from a vast network of hospitals and doctors to persuade 4,600 customers in Minnesota they were buying an insurance policy," according to Attorney General Lori Swanson. The two insurers, "Direct Medical Network Solutions Inc. of Southlake, Texas, and Houston-based Association Healthcare Management Inc., provide limited discounted medical services through certain doctors and clinics, but their plans are not insurance policies, Swanson said. She said neither company was licensed to sell insurance in Minnesota" (Bierschbach, 2/10).

Minneapolis Star Tribune: "According to the suit, Direct Medical charged consumers an enrollment fee of around $135 and a monthly bill of up to $459.50; Family Care charged consumers an enrollment fee of around $100 and a monthly fee of up to $109.95" (Von Sternberg, 2/10).

In a separate article, the Star Tribune reports that the "number of such scams has been growing as more people lose medical coverage through layoffs or cuts in employee benefits, [Swanson] said, noting that 9.1 percent of Minnesotans are uninsured, up from 7.2 percent in 2007. Swanson sued two other companies last year for similar practices involving more than 2,000 Minnesotans. Dozens more are operating in Minnesota, and Swanson said she is investigating another 12 or so of them. 'With insurance premiums rising and health reform stalled, health discount plans are filling the void,' she said. 'The problem is [the discount plans] don't provide the financial protection people need if they get sick'" (Yee, 2/11).

Meanwhile, "WellPoint Inc. faces a firestorm of controversy as the health insurer's massive fourth-quarter profit gains are likely to become the center of attention as it seeks to raise premiums in California," MarketWatch reports. "WellPoint posted a 727.3% gain on its bottom line during the fourth quarter, as net profits jumped to $2.74 billion from $331.4 million in the year-ago period. Its margins catapulted to 18% from 2.2% in 2008's fourth quarter. While the bulk of that 2009 profit gain is a one-time windfall realized from the sale of a subsidiary, it may be difficult to get that point across. WellPoint is up against a rising tide of criticism for its plan to raise premiums at its Anthem Blue Cross of California division 30% to 39%" (Britt, 2/10).

NPR reports on the federal inquiry into the Anthem Blue Cross rate hike (Varney, 2/10).

The San Francisco Chronicle reports that "members of other health insurers," including Health Net and Aetna, "say they're also getting hit with sky-high increases." The Chronicle adds that "California physical, occupational and speech therapists are also taking issue with Anthem. The therapists said the insurer cut their reimbursement rates by 30 to 50 percent on Feb. 1" (Colliver, 2/11).

Indianapolis Star: "Indiana customers of WellPoint are joining Californians in their outrage over steep hikes in the premiums they pay for individual health-insurance coverage. ... WellPoint said the increases that take effect in Indiana on March 1 have been approved by the state. The Indiana Department of Insurance said it uses an independent actuary to evaluate each premium increase for individual insurance products. 'If a company demonstrates through actuarial analysis that the benefits provided require an increase in excess of 30 percent, such increase must be approved,' Doug Webber, chief legal counsel for the Indiana Department of Insurance, wrote in an e-mail. WellPoint said rising premiums are caused by the rising cost of health care" (Lee, 2/11).

Meanwhile, The San Diego Union-Tribune reports that as the economy slowly recovers, health insurance costs for those with individual policies continues to increase over larger numbers of unemployed and those relying on government health care programs. As a result, "hospitals and doctors are passing on more of their uncompensated costs to patients with private insurance."

Additionally, the cost for providing care is increasing and pools of people with individual policies have become filled with sicker people, adding to higher rates for everyone. "The problem is taking center stage now that Anthem Blue Cross has unveiled rate increases of up to 39 percent for its 800,000 individual policyholders in California. The premium increases, which will take effect March 1, far outpace the increases of 10 percent to 25 percent seen in previous years among most insurers offering individual policies" (Darce, 2/11).

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