Despite outcry, Anthem Blue Cross to go ahead with big rate hike

The decision by Anthem Blue Cross to hike its California customers' insurance rates by up to 39 percent has sparked hearings in Congress and at the California State House. Obama and Democrats cited it at Thursday's healthcare summit.

Damian Dovarganes/AP
A man dressed as "Captain America" joins a group of physical therapists and consumers affected by insurance premium increases, during a protest outside the offices of Anthem Blue Cross in Los Angeles on Tuesday. Despite the House Oversight and Investigations subcommittee hearing on "Premium Increases by Anthem Blue Cross in the Individual Health Insurance Market," the insurer will go ahead with its rate hike.

Anthem Blue Cross, the health insurer that plans to boost rates by as much as 39 percent in California this year, has become a lightning rod in the national debate over healthcare reform.

In President Obama’s healthcare summit Thursday, both Republicans and Democrats held up the company as an example of why the federal government needs to take steps to keep rising insurance premiums in check.

Of course, both sides differ on how to go about tackling that issue. See the Monitor’s coverage of the summit here.

Over the past few days, however, Democrats have sought to turn rising anger over Anthem’s rate hike into support for their healthcare reform legislation by highlighting the alleged excesses of Wellpoint Inc., the insurer’s parent company.

Despite the outcry, the rate increase for Anthem's California customers who have purchased individual policies is expected to take effect May 1. It was delayed for two months to allow California regulators to review the hike to ensure it complies with state law.

The president included a provision in the revised healthcare package that would give the federal government the ability to block insurance company premium hikes that it deems unjust.

“I promise you that the problem that’s going on in California is going on in every state,” Mr. Obama said Thursday at his healthcare summit, in regard to rising premiums.

Executives from Anthem and WellPoint were put in the hot seat over its increases this week at hearings both in the California legislature and in Congress.

"How much profit is enough?" Democratic California Assemblyman Dave Jones asked an Anthem executive at a Tuesday hearing in Sacramento.

According to the LA Times, WellPoint saw a $4.75 billion profit in the last quarter of 2009.

"Corporate executives at WellPoint are thriving, but its policyholders are paying the price," Rep. Henry Waxman (D) of California said Wednesday at a congressional hearing on rising health-insurance premiums. “If we fail to pass health reform, insurance rates will skyrocket and health insurance will become so expensive only the most healthy and the most wealthy will be able to afford coverage.”

WellPoint executives said the increases reflect the rising cost of healthcare and were a byproduct of the economic downturn.

“Raising our premiums was not something we wanted to do,” Angela Braly, president and CEO of WellPoint, told the House Energy and Commerce subcommittee on oversight and investigations. “But we believed this was the most prudent choice, given the rising cost of care and the problems caused by many younger and healthier policyholders dropping or reducing their coverage during tough economic times.”

While Mr. Waxman and other Democrats have accused WellPoint of pursuing large profits at the expense of its California customers, Ms. Braly said the company would be targeting what she described as a reasonable 2 percent profit margin.

A WellPoint spokesman told the San Jose Mercury News that the intensifying focus on insurance was “an effort in Washington to shift the focus to the insurance industry" instead of the “the real issue of soaring costs of medical care."

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