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Lawmakers quick to demand action on Anthem Blue Cross

Angry lawmakers turned up the heat on Anthem Blue Cross on Tuesday, calling for federal and state investigations into the California health insurer’s decision to increase rates by as much as 39 percent for thousands of policyholders statewide.

U.S. Rep. Henry Waxman, D-Los Angeles, chairman of the House Energy and Commerce Committee, led the way by scheduling a Feb. 24 special hearing on the increases.

California Democratic Sens. Barbara Boxer and Dianne Feinstein also weighed in Tuesday, with Boxer urging state Attorney General Jerry Brown to investigate the proposed rate increases and Feinstein asking state Sen. President Pro-Tem Darrell Steinberg, D-Sacramento, to introduce legislation to regulate rates.

“I can think of no better example of why we need health insurance reform,” Feinstein said in a statement, calling Anthem’s behavior a stark reminder of why health premiums should be regulated.

The furor started last week when individual Anthem Blue Cross members – those who are not covered under an employer or group policy – received letters informing them that their monthly premiums would go up effective March 1.

Anthem, a Woodland Hills Los Angeles County insurer owned by Indianapolis-based WellPoint Inc., has refused to disclose how many people are affected or how high rates will rise, but the company has about 800,000 individual policyholders in California, and members have reported increases in the range of 30 to 39 percent.

Under the backdrop of stalled national health reform, the Obama administration has pointed to Anthem Blue Cross’ actions as a reason comprehensive overhaul is needed. At a White House briefing Tuesday, President Obama said the increases are a sign of what will happen to many Americans without reform.

Anthem’s response to the increased scrutiny has been mostly silence. The company has yet to respond even to Monday’s request by state Insurance Commissioner Steve Poizner to delay the rate increases until May 1 to give the state time to investigate.

Increase on top of increase

Company officials say the increases are necessary because of increased medical costs and a shrinking membership.

California has virtually no authority over health insurance rates, but the state Department of Insurance plans to hire an outside actuarial firm to determine whether the health insurer spends at least 70 cents of every premium dollar on health benefits, as required by state regulation.

Feinstein on Tuesday urged Steinberg to introduce legislation to give the insurance commissioner power to regulate rates, an authority that commissioners in some 25 other states already have.

Anthem Blue Cross has instituted high premium increases in the past. Last year, individual policyholders reported rate increases as high as 68 percent, and many of the same members who were hit then said they received notice that their premium would go up again this year.

Assemblyman Dave Jones, D-Sacramento, whose legislation to require that health insurance premium increases be approved by state regulators failed in committee last year, plans to hold a hearing Feb. 23 in Sacramento to address
not only Anthem’s increases, but double-digit health premium increases across the market.

“They Anthem have clearly made themselves the poster child for why we need health insurance reform,” he said, adding that he plans to reintroduce his bill.

Changed climate

Consumer advocates say the company’s rate increases may not be new, but the political and economic environment has changed.

“With the economy in the tubes, people are having a much harder time affording these big increases,” said Jerry Flanagan, health care policy director for Consumer Watchdog in Santa Monica. “Also, the fact that health care is in the political spotlight… gives a political opening to talk about the reform effort.”

Waxman called on WellPoint Chief Executive Officer Angela Braly to produce a detailed explanation of the proposed Anthem rate increase, along with evidence showing claims history and profits for individual policies from 2005 through 2008. He demanded the information by Feb. 19, in advance of the Feb. 24 hearing.

WellPoint, which has about 34 million members nationwide, earned $4.7 billion, or $9.88 per share, in profit for 2009.