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WellPoint Responds to Rate Criticism, But Sebelius Is Skeptical

by Astrid Fiano, DOTmed News Writer | February 12, 2010
Insurer and agency dig
into debate over rates
WellPoint, Inc., the parent corporation of Anthem Blue Cross, has responded to Department of Health and Human Services Secretary Kathleen Sebelius. Earlier this week, Sebelius asked Anthem to justify the planned rate hike for those insured under Anthem in California, up to 39 percent (DM 11607). A House Subcommittee is also planning an investigation of the rate hike (DM 11641).

The WellPoint letter is from Brian Sassi, President and Chief Executive Officer, Consumer Business Unit. Sassi began his letter by stating the company's concern for its California customers and community. Sassi then said Anthem's profits were in line with or below many competitors'. He clarified that the rate increase reported in the media pertained to the individual insurance market, not for insurance obtained through employers. Sassi then addressed the rates, saying the rate increases ranged from 20.4 percent to 39 percent. He said that the cost of coverage would depend on the type of coverage, and that the company had health plan advisers who could help consumers with coverage choices.

Sassi then went into detail about individual insurance market rates and why they are rising faster than medical inflation. The main reasons, Sassi said, were provider prices increasing faster than general inflation, and increases in consumer utilization. Sassi also said California costs are significantly higher than medical inflation due to: a less healthy risk pool; individuals moving to lower-cost options in a challenging economy; individuals aging into a higher age category, and deductible leveraging. Sassi then stated the company felt the focus of any health care reform must be controlling the quality and costs of medical services.

Sebelius does not appear satisfied with the company's response. In a new statement released on Thursday after the WellPoint letter was published, she 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: pay more for coverage, cut back on benefits or join the ranks of the uninsured. High health care costs alone cannot account for a premium increase that is 10 times higher than national health spending growth. 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."