Congress Launches Inquiry into Anthem's Proposed Premium Hikes

Congress is asking for Anthem Blue Cross's corporate e-mails and other internal documents and wants the top executive of Anthem's parent company, WellPoint, to testify as to why the insurer is raising individual health insurance premiums by as much as 39% in California.

WellPoint released a statement Wednesday, referring to the proposed rate hikes for the first time, saying it does "regret the impact this has on our members," but suggested they were related to increased medical costs. The company did not mention specific numbers.

"It is important to note that individual medical insurance premiums do not reflect an individual member's personal claims experience," the company said in a statement. "As medical costs increase across our member population, our member population premium increases to the membership pool is the result.''

"Unfortunately, in the weak economy, many people who do have health conditions are foregoing buying insurance," the company statement added. "This leaves fewer people, often with significantly greater medical needs, in the insured pool. We regret the impact this has on our members."

The situation involving Congress "highlights why we need sustainable healthcare reform to manage the steadily rising costs," WellPoint said in a statement.

The proposed increases in individual health insurance has set off a furor on Capitol Hill where the House Committee on Energy and Commerce and its subcommittee on oversight and investigations said they would examine the proposed rate hike increases affecting California's largest for-profit insurer. The subcommittee has scheduled a Feb. 24 hearing in Washington about the proposed increases, scheduled to take effect March 1.

Saying the proposed increases are "deeply troubling," the Energy and Commerce Committee Chairman Rep. Henry A. Waxman, D-CA, said, "We need to know what possible justification there could be for increases of this magnitude."

In California, state Assemblyman Dave Jones, D-Sacramento, chairman of the Assembly's Health Committee, announced plans to hold a Feb. 23 hearing to examine Anthem Blue Cross, based in Woodland Hills, as well as other California health insurers. The state's insurance commissioner, Steve Poizner, has said he would take "regulatory and legal action" against Anthem Blue Cross if the health insurer does not agree to delay the rate hikes.

The California officials are the latest to attack Anthem's decision. President Obama referred to it when he discussed national healthcare legislation and Health and Human Services Secretary Kathleen Sebelius sent a letter to Anthem Blue Cross, saying she wanted the company to justify the rates. "These extraordinary increases are up to 15 times faster than inflation and threaten to make healthcare unaffordable for hundreds of thousands of Californians, many of whom are already struggling to make ends meet," Sebelius wrote to Anthem Blue Cross.

Sebelius said the proposed increase was "difficult to understand" given WellPoint's $2.7 billion profit in the fourth quarter of 2009.

In launching its inquiry, the congressional committees requested the testimony of Angela Braly, the president and CEO of Wellpoint. The committees said they wanted to hear from the company no later than Friday if she would agree to the request. The committee also sought in a letter to Braly:

• Internal communications, including e-mail, to or from senior corporate management relating to the company's decision to increase premium rates in California. The committee referred to senior corporate management officials as levels of vice president and above for Anthem Blue Cross and WellPoint Inc.
• All presentations to senior corporate management, or government agencies, relating to the increase in premium rates in the individual health insurance market.
• A detailed explanation of the reasons for the proposed rate increase.
• For each year from 2005 to 2008, a table listing, as appropriate, premium revenue, claims payments, sales expenses, and other general or administrative expenses, and profits for all individual health insurance products, including an explanation of the methodology used for these calculations.
• A table listing all proposed premium increases from January 1, 2009 through December 31, 2010 in the individual health insurance market for all WellPoint subsidiaries, including the amount of the proposed premium increases, the subsidiary, the state affected, and a detailed explanation of the reasons for the increase.

WellPoint company spokesman Kristin Binnis says the insurer is "reviewing [the congressional request] at this time." The company also expects to reply to Sebelius's letter "promptly," she said.