Health Inc.

Insurer's Rate Hike Becomes Administration Talking Point

As President Obama looks to get health overhaul legislation moving again, over the weekend he called out a California insurer's planned rate hike as an example of why change is still needed.

On Monday, Department of Health and Human Services Secretary Kathleen Sebelius challenged Anthem Blue Cross of California, a unit of WellPoint, to publicly justify the increase—as much as 39 percent on individual policies next month.

In an open letter to the company, Sebelius wrote, "These extraordinary increases... threaten to make health care unaffordable for hundreds of thousands of Californians, many of whom are already struggling to make ends meet in a difficult economy." About 2.5 million Californians are covered by individually purchased policies.

WellPoint, Anthem's parent company, is California's largest for-profit insurer. And WellPoint, Sebelius pointed out in her letter, isn't exactly struggling, with profits of $2.7 billion in the last quarter of 2009.

So what does WellPoint have to say? The company got the letter and is working on a formal response. In the meantime, the insurer issued a statement saying rates reflect rising costs of health care. "Unfortunately, in the weak economy many people who do not have health conditions are foregoing buying insurance," the statement says. "This leaves fewer people, often with significantly greater medical needs, in the insured pool."

Anthem actually gave health care overhaul a plug, noting that this situation "highlights why we need sustainable health care reform to manage the steadily rising costs of hospitals, drugs and doctors." But it seems to be a matter of opinion, however, at whom the overhaul should be aimed.

"As we continue the health insurance reform debate in Washington, this announcement reminds us that too many Americans can be left with unaffordable insurance each time the rates or rules change in the private market," Sebelius writes in her letter, adding that "we need health insurance reform that will give American families the secure, affordable coverage they need."

On Saturday, the Wall Street Journal published a long interview with WellPoint CEO Angela Braly about the current state of health insurance and the prospects for overhaul. She called the Democrats' approach to health overhaul "a wasted opportunity" because "health-care reform" turned into "health-insurance reform."

Braly told the Journal, insurers could make the system work "from an affordability point of view," but only with "a meaningful requirement that people join in the pool." She told the paper that the bill Congress was about to pass would have led to more expensive insurance instead.

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