Sebelius Fires Back at Anthem Blue Cross About Proposed Rate Hikes

In a back-and-forth with officials of Anthem Blue Cross's parent company WellPoint over the company's proposed rate hikes in California, HHS Secretary Kathleen Sebelius on Thursday said the company's proposals remain perplexing. She added it leaves customers "with nothing but bad options: pay more for coverage, cut back on benefits or join the ranks of the uninsured."

Reacting to a letter from WellPoint, Sebelius said the company's proposal to raise individual health insurance premiums by as much as 39% in California also demonstrates "the urgent need for real reforms that fix our broken heath insurance system."

Sebelius issued a statement after receiving a letter from WellPoint, which said the proposed rate hikes affecting 800,000 individual health insurance members were needed because of increased medical costs. The company said it did "regret the impact this has on our members." The company also said that individual medical insurance premiums do not reflect an individual member's personal claims experiences, but take into account other expenses, such as the medical costs.

Sebelius said she is perplexed that the company is seeking a huge rate hike. "It remains difficult to understand how a company that made $27 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," she said.

"High health costs alone cannot account for a premium increase that is 10 times higher than national health spending growth," Sebelius added. "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," Sebelius said.

Sebelius made her pitch for health reform as the Senate and House continue to wrangle over stalled reform bills.

In addition, Anthem's proposed premium increases have prompted an inquiry on Capitol Hill. 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," 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.