Health insurer WellPoint Inc. recently announced its intent to increase rates for certain California Anthem Blue Cross members by an average of approximately 30 percent.

In a letter to U.S. Department of Health and Human Services (HHS) Secretary Kathleen Sebelius, WellPoint Consumer Business Unit President and CEO, Brian Sassi, clarifies that the rate increases set to go into effect March 1 relate only to Anthem’s individual insurance market, which represents approximately 10 percent of the 800,000 million members in California. Furthermore, not everyone that falls within that group will incur the 39 percent increase. On average, affected members may experience anywhere from a 20.4 percent decrease to a 34.9 percent increase.

Rate increases, Sassi says, are necessary because a weak economy is leading healthy individual insurance buyers to drop coverage or buy less expensive plans. That reduces the premium revenue available to cover claims for those who choose to keep their current coverage—typically the elderly and the sickly.

26 Responses to “Wellpoint Rate Hike Fuels Obama’s Case for Reform”

1. Pat Suhr Says:
   February 17th, 2010 at 1:01 pm

   Does this have anything to do with the company going from non-profit to profit in California, or is this another company?

2. Jen Sherrill Says:
   February 17th, 2010 at 1:10 pm

   So are the rates increasing for the physicians who treat the remaining patients? It seems that if you increase rates, people will look for a cheaper alternative, or go without insurance. Maybe they should stop paying their executives bonuses and reduce their salaries from the millions so that they could aford to pay the claims.

3. Dinah Robinson Says:
   February 17th, 2010 at 1:31 pm

   yes, we do need healthcare reform. Go Obama!

4. Regina Willy Says:
   February 17th, 2010 at 1:37 pm

   Blue Cross was once one of the BETTER health coverages.
   Its ridiculous how Blue Cross wants to raise their rates with the way things are going now adays. People out of work-Companies closing——-Blue Cross what are you doing to us Americans???????

   People will look for other companies for health coverage and better rates. I wouldnt be surprise of those companies that carry the Blue Cross coverage for their employees drop them–

   I guess we will see in the long run how Blue Cross stands among the other competition!!!!

5. Jessica Says:
   February 17th, 2010 at 1:44 pm

   Correct me if I am wrong…doesn’t Medicare cover the elderly? Even if BC is secondary to MC they still will not come close to paying out what the should. BOO OBAMA, why don’t you fix what is wrong before you go blowing tax payer money. Look at where the insurance companies are going wrong by charging excessive amounts for coverage and not paying jack on claims.

6. Jan Anderson Says:
   February 17th, 2010 at 1:56 pm

   Yes, we need health INSURANCE reform.

7. Denis Says:
   February 17th, 2010 at 1:57 pm

   You can’t stop paying their executives bonuses or reduce their salaries from the millions because then they will have money to pay claims so that sick people can get care. That is “spreading the wealth” and “socialism.” You forget that the founding fathers wrote into the constitution that the government must be so weak that they are powerless to stop corporations from taking over so that the wealth of this country can be concentrated into the few “deserving” hands that get it via blind ambition, backdoor deals and crass disregard for their fellow humans and the future of mankind. The connection between “hard work” and success is an illusion that is cultivated so that you continue to work hard while the wealthy line their pockets and you vote for more rights for the wealthy in hopes that you one day will become one of them.

   No, the moment we speak of “the people” via the government controlling how greedy corporations can get in such a field as healthcare, that is vital to peoples’ lives, the moment we speak of this someone on Fox will rally the troops of ignoramuses so they can chant “death panels” and other nonsense and disrupt needed reform.

   This crisis has just shown how weak the government has become and how powerless it is to protect its citizens from the bankers and other sociopathic corporate entities (e.g. health insurance plans) that do not care about anything but the bottom line. It has shown how corporate greed has even gotten its tentacles into the US Supreme Court so that they now have more “freedom of speech” than actual people. Guess what, corporations will now buy their politicians outright and say bye-bye to anything that will benefit the common man. We are back to the beginning of the feudal/dark ages people, wake up and smell the mead.

   Bottom line, watch what you put into your mouth, exercise and try to stay healthy. Do not expect the government to help you or the private sector to give a flip whether you live or die. If you are on Medicare (i.e. government run healthcare) or about to go on enjoy it while it lasts, when the baby boomers start signing up (very soon) and the next batch of high fructose corn syrup induced diabetics start straining the system it will go bye bye as well. If you are working age like me then think of it as you paying for your parents to get care; it might lessen the homicidal furor you will feel when they flip you the finger as you try to collect on the benefits you have been paying all your life.

   Those enslaving the populace through the corporate shell games, get your heads out of the profit and loss statements for a minute and take the time to read A Tale of Two Cities or some other material describing the French revolution. You might find it interesting to find what happens when you step on the backs of peoples necks so hard they can barely breathe.

8. Pat Says:
   February 17th, 2010 at 2:50 pm

   I agree wholeheartedly. As a coder, I see what the most common health problems are and I am always wondering why they are so common. It is due to our eating habits and our lifestyle. Taking drugs to fix things does not change either of those conditions, so people often end up with other problems as well. I agree with what you said about health care, but I think Obama is up against a huge machine that he is trying to change. I think he’s great for trying. He needs our support!

9. B Szampruch Says:
   February 17th, 2010 at 2:59 pm

   I agree with Jen Sherrill! I think the excuse that Wellpoint list above in the article is a bad excuse for why their executives don’t want to live the way the rest of us are forced to. They want to keep their bonuses! What’s REALLY wrong with this, is the physicians are the ones getting caught in the middle with getting very low reimbursement. They are no longer paid to save lives! There is an awful but eye opening joke I hear going around: This is the way the government and insurance companies will save money. People will not be able to afford to see a doctor so they wait and many die waiting. The more that die, the more the insurances will make more money by not paying claims and still collect premiums and then the government pays less in social security income. This is the extreem version of population control!!!!!!!!!!!!!!!!!!!!!!!!!! It’s a win-win situation for insurance and government.

10. Lynda Wurtz Says:
    February 17th, 2010 at 3:28 pm

    I have work in the medical field for 30 years and have increasingly seen people forgoing necessary medical treatment because they either work for a small employer who is not obligated to provide medical insurance or are self employer or out or work. The far right would have you believe that Obamas health insurance plan would cost the taxpayer too much money. Do they not understand that these people who are not treated for conditions in the early stages IE melanoma are later seen in an emergency setting for much more serious conditions. Do they not also understand that everyone and I mean everyone is absorbing these costs. Emergency rooms are closing down in records numbers because they cannot afford to treat the uninsured. The current system is not working. Talk to anyone who has been denied coverage for a pre-existing condition for example my 82 year old mother who had cancer 20 years ago and current has heart problems. She pays on a retirement income over $400 per month for a supplemental insurance to medicare. Insurance companies are for profit. It is to their benefit to withold payment and collect premiums. Anyone who works in the medical field understands that it is not the physician directing medical care but the insurance companies. At least a goverment run program would be consistant, now every insurance company has different policies on what is a covered benefit. The reduction in paperwork and staff time alone would same millions. Lets stop making decisions along party lines and start solving the problem.

11. Kim Okerson Says:
    February 17th, 2010 at 4:21 pm

    No one should die because the cannot afford health insurance and no one should go broke because they get sick. Blue Cross is on the road to doing both to their insureds. In these harsh economic times people who pay for their own insurance are barely able to do so and for them to raise their rates and not group rates, is ridiculous. This is what the president needs to be looking at. Carriers who take these ridiculous measures.

12. Phyllis Davis Says:
    February 17th, 2010 at 5:51 pm

    I think that we need health reform but not what Obama is offering. Obamas way is a way to bankrupt the US. If I wanted to live in Europe where medical care is mediocre then I would have moved there. Socialism (that is what it will be if Obamas plan passes) is not the answer! If Canada’s and other countries that have govt run health care are so great then why are their Governers coming to the states for services that are not heart surgeries that are not done there. There should be a program to reach those who are in the gap of making too much to qualify for medicaid and not enough for a regular plan. I agree with lifting state limitations of selling it across state lines. But the one thing that I dont see anyone mentioning is that each state has mandates that are required for an insurance carrier to pay for. California is one of those states with the biggest amount of mandates just like the cost to live there is higher and so goes the price of insurance in California.

13. R. Douglas Wise, CPC Says:
    February 17th, 2010 at 8:42 pm

    The health insurance market in the United States holds absolutely no resemblance to an actual free market. When there is a such a free market (fat chance!), then it might at last be appropriate to comment on its shortcomings. When a government prints money out of thin air to the tune of a $2 TRILLION deficit, what do you think is going to happen when they’re making decisions about your health? Unfortunately, goods and services (e.g. healthcare) cannot be created by fiat, which is why your economy remains in the tank and will stay there for the next few years. Bernard Madoff has got nothing on these guys.

    Someone approvingly mentions the French Revolution? Wow. Remember that Robespierre lost his head as well.

    For those men and women who wish to be prosperous and free, go to http://www.mises.org and/or http://www.acton.org. For the rest, pray there are enough life jackets.

    “The inherent vice of capitalism is the unequal sharing of blessings; the inherent virtue of socialism is the equal sharing of misery.” — Winston Churchill

14. Michelle Says:
    February 17th, 2010 at 10:24 pm

    I don’t understand how they say it is only for individual plans , my husband has an employer plan and
    his rate is going from $57 to $92 for the same policy, this has forced his employer to drop Anthem and go with a different insurer, now we must find new doctors as his are not on the new plan. Also we live in NV and not Ca so who are they kidding. Just where are all these premiums going I work in the medical field and it is not going to the providers, Anthem is one of the lowest paying plans I have seen for physician and hospital reimburstment. So yes are the executives raking in the cash? Just where is it gong.
    Yes we need reform in the healthcare industry between the insurance and drug companies that are
    raking in the doe, my friend had breast ca and one of her medications with insurance costs her
    $398 a month for 30 pills, Totaly ridiculous. Something must be done and soon. The system worked years agowhen there was straight deductibles and 80/20 or 90/10 plans. But some folks got greedy and they are the ones reaping the benefits, not the little person just trying to stay healthy and lives pay check to pay check. The carrriers need the reform !!!!

15. CAROLYN S. Says:
    February 18th, 2010 at 4:24 am

    I can’t believe the finger pointing and name calling… even on this forum. “Socialism” “Obama’s” healthcare reform. GOT A BETTER PLAN? SEND IT TO WASHINGTON. Who’s system was in place prior to President Obama taking office? NEWS FLASH…. the current system has been broken for a long time. I’ve been in healthcare 30+yrs. When I see a 24 year old file for disability and get Medicare and Medicaid and has never worked and paid into either system and a 70yr old who worked all their life but now struggles to pay 20% Medicare co-pays..wheres the justice in this system that we’ve had for how many years before the current administration put any plan on the table. The healthcare system was fueled by greed and I suggest that if we don’t stop pointing fingers and name calling this system will fall.

16. aw Says:
    February 18th, 2010 at 8:50 am

    Looks like there are lobbyist from Blue Shield on Staff in the white house.
    Why else would you hike up the rates? I believe I read somewhere that blue shield was helping the gov’t come up with the proposal for healthcare reform. Makes you wonder why they would?

17. J Blake Says:
    February 18th, 2010 at 8:57 am

    An insurance company or even a government run plan can only work if enough funds are generated from a pool of healthy people to cover the bills of the sick. As demand for services increase (often due to unhealthy lifestyle choices as well as people living longer) coupled with expensive advanced technology, the amount we have to pay for premiums to the private sector or in taxation to fund the public plans must increase to cover the higher costs; or the insurance companies and/or goverment will go bankrupt. If we don’t want our insurance rates and/or taxes to escalate to cover the increased demands for medical services, then the alternative is to reduce or restrict services, which is what is done in Canada and other countries that have government health plans. For example, at one time, private plans and Medicare did not cover preventive services. However, due to public demand and governement regulation, both Medicare and the private plans now pay for preventive service. While most of us will agree that this is a good thing; the demand for services has now expanded from just sick people to healthy people as well, so to cover the increased demand, we need to pay increased premiums and/or taxes.

18. Debra Says:
    February 18th, 2010 at 10:19 am

    Obama’s plan is socialism and socialism doesn’t work. All he wants to do is take money from those of us who have sacrificed and worked hard, and give it to those who havent. Obama’s plan is to make everybody dependent on the government so he can regulate and control every area of our lives. My healthcare is my responsibility–not anybody elses. America better wake up before its too late.

19. Pat Says:
    February 18th, 2010 at 12:21 pm

    We are a socialist economy, as we speak young people are having kids, non married, get benefits, work only to the minimum to keep on state/federal giveaways for rent etc. Some of them only pay $1,000 to federal goverment in taxes, when they file they get back $7,000. single, head of household etc. What ‘s that all about? If your married, work hard, pay for everything your the one who gets punished to pay for everyone else. Its called middle class which is dwindling. I work in healthcare, medicare works, its that now we have medicare HMO’s which are limiting and being fed goverment money by B/C etc. In all, we all pay for it, so why not make it universal, where everyone pays there fair share, if that ever possible. It should balance healthy/sick. Healthcare should of never been for profit, its a moral obligation. I see medicare patients come consistenly to the doctors for things they should never come in for. Then you have those who can’t afford to come and get sick. I see many without healthcare. Everyone should get a job in the medical field to see whats really happening. Its seems everyone has been okay with corporations if they are employed by them, or if your lucky enough to have a state or federal job, you have a golden ticket for benefits and healthcare. Preventative medicine does work, keeps people healthier, but we all need to pay for some of it. Some people pay $2000 a month for benefits others $100.

    High deductible should’nt cause B/C to raise rates, the ones who elect high deductibles are paying for the doctors, whats the outlay for them. So maybe if healthcare was affordable for everyone, and i mean everyone, there would be money to go around to balance out the sick/healthy. People just don’t go to the doctor if they don’t need too. B/C and others are good for denying people with individual coverage for just about anything, especially if your weight is past there BMI range, look out if you had a sinus infection, denied… They look for anything to drop you. They only want healthy people. As a manger group rates are higher than individual rates, so B/C is loosing companies covering for there employees, now there going individual, so lets hit them up with higher rates, they need to balance there bonuses!! Soon no one will be able to cover employees and individuals won’t be able to afford premiums. The good old days where high deductible plans 90/20, 80/20 etc., they actually worked, go anywhere and its covered. The insurance companies got greedy…. Why the restricions, more money in the healthcare companies pockets. We need reform, we need a company out there to make a new healthplan and ditch all existing plans. We also need healthier food and exercise to combat future health problems. Bottom line we all need to pay a fair share equally if its going to work. The problem is not just healthcare, its a combination of greed everywhere. We are a crumbling country.

20. Lisa Says:
    February 18th, 2010 at 1:35 pm

    Actually Obama’s plan is to destroy our system and replace it with HIS chosen system. It’s called the Cloward Piven Strategy…overload the system. Look into it.

    And the truth is, nobody in Washington gives a crap about the people of this country or our Constitution. They’re all in it for the power & money.

21. Suzanne Says:
    February 18th, 2010 at 1:38 pm

    This is yet another attempt by the mainstream media to sway opinion of the less informed and the Administration to ambush the ‘big bad insurance companies’.

    Allow me to quote highlights from today’s Wall Street Journal: ” Henry Waxman ought to subpoena California’s political class because Wellpoint’s rate hikes are the direct result of the Golden State’s insurance regulations – the kind that Democrats want to impose on all 50 states. Under federal Cobra rules, the unemployed are allowed to keep their job-related health benefits for 18 to 36 months. California then goes further and bars Anthem from dropping these customers even after they have exhaused Cobra. California also caps what Anthem (Wellpoint’s California unit) can charge these post-Cobra customers….even as California insurers have had to keep insuring these typically older and sicker patients, the recession has driven many younger, healhtier policy holders to drop their insurance -leaving fewer customers to fund a more expensive pool.” “This explains why Anthem lost $58 million in California on its post-Cobra customers in 2009. If WellPoint didn’t raise premiums amid these losses, it would soon be under assualt from its shareholders, if not completely out of business.”

    “Anthem last year hired an independent actuarial firm that found its rates sound and necessary. The company presented its findings to CA insurance commisioner Steve Poizner last November, who had a month to review the increases and never objected. Anthem’s profit margins are in line with its two largest nonprofit competitors in the state: Anthem’s per-member-per-month basis in 2008 was $12.62, compared to Bue Shield’s $13.22, and Kaiser’s $18.45.”

    The facts speak for themselves and don’t need conjecture or spin.

22. R. Douglas Wise, CPC Says:
    February 18th, 2010 at 2:50 pm

    Excellent point by Suzanne, thanks for that. I would also point members to Reed Pew’s piece in this month’s Coding Edge for similar information.

    However, the difficulty in agreement in a forum like this is that there is no standard to which to appeal. Anecdotal evidence can be found to support nearly every position. Furthermore, none of us comes to the discussion with an objective set of facts. Let’s talk about the principle. In a truly free and competitive market, if Wellpoint (or any other insurer) were to arbitrarily or artificially crank up premiums, they would be undercut by their competitors.

    We desperately need to put this notion of government-run single payer healthcare to bed. When gov’t taxes or prints $1, $1 is taken from the private sector. This is the economic concept of “crowding-out.” By taxing the private sector in order to fund their healthcare plan, we would be exchanging efficient dollars for inefficient ones. Government does not tax itself. Therefore, by removing the dollars from the private economy, it has lowered the pool of funds from which it can draw, including all the lost efficiencies of the dollars not spent (in private transactions). The fundamental point here is that government needs the private sector economy to flourish in order to fund its ill-fated plans. The private sector cannot flourish when it is being crowded-out, not to mention the regulatory nightmare that would further inhibit economic growth.

    Government never runs anything as efficiently as the private sector. (Ex: Ford made $1B last year, GM and Chrysler lost a similar amount – you’re on the hook for that also, American taxpayer!) A free market economy relies on prices to communicate information about the conditions in that market. Government fixes prices (i.e. Medicare). It therefore tries to square a circle. Prices reflect all those individual transactions that take place between consumers and investors and businesses every single day. Government tries to anticipate this information. They simply cannot have all the information necessary to efficiently match revenues with benefits. What results is artificial scarcity and rationing. A perfect example of this is the SGR formula. Congress pompously presumed that it could forecast Medicare expenditures for years into the future and every year that budget has been massively over-budget and now here we are, staring 20% reductions in the face. All because neither Congress nor HHS can gather the information necessary or considers the effects of their own policies. Do you seriously want that wreck, with scarcity and rationing, extended to the rest of the nation?

    I know that members of the Academy strive constantly to remain educated on coding, billing, and healthcare matters. Seek understanding of economic concepts also.

23. Christi Says:
    February 18th, 2010 at 10:25 pm

    My understanding is that insurers make $0.03 on the dollar as profit. This means: THEY MAKE MORE AS COSTS INCREASE…more dollars to get $0.03 out of, it simply gets passed back to us in higher premiums!

    What’s driving the costs increase? We are. That’s right America, look in the mirror. You can’t fix the problem unless you know what the problem is. We’re too inactive, ignorant of our own bodies and healthcare procedure costs and benefits, our children are obese (check out CDC.gov and watch the map turn red between 1990 and 2005) and we’re complacent with facts like up to 1/3 of us will get diabetes in our lifetime. Suggest a tax on fast food to pay for healthcare for uninsured…

    $0.03 profit comment comes from this:
    http://www.youtube.com/watch?v=JYC2DJWU41s

    It also doesn’t help that most hospitals loose a ton of money on Medicare…and have to make it up on non-Medicare patients.

24. Denis Says:
    February 19th, 2010 at 9:39 am

    C. Douglas Wise,

    I am aware that Robespierre lost his head and I did not “approvingly” mention the French Revolution. I mentioned the French Revolution as a warning to the rich who are brazenly bilking the people. I specifically referred to A Tale of Two Cities; Dickens’ did not approve of the angry mob that beheaded King Louis XVI and the nobility even as he describes the disgusting excesses and disregard that this ruling class had for these people.

    My point is that when you continuously abuse and disregard the people there is a point where the people decide it is better to die defending their dignity than to live to feed the rich like sheep being shorn and slaughtered. That is what human history has shown continuously; there is a breaking point for how much abuse people will take as individuals and as a class.

    Conclusion, I am no Robespierre and I would not approve of the bloodshed any revolution of the working class would produce any more than you would. I realize the French Revolution was horrible and I side with neither the nobility nor the revolutionaries because they are both guilty of unspeakable atrocities. But it happened and it serves as a warning example to all. I can understand the frustration people feel and I can see that there is something brewing that the abusers of the people should take into consideration. That was my point.

25. Denis Says:
    February 19th, 2010 at 11:20 am

    Yes, the private sector is the model of efficiency. They are experts at externalizing the true costs of their products. Who pays those externalized/spillover costs? Who reaps the profits?

    People who extoll the virtues of the unfettered free market always seem to leave out of the equation human greed, hubris and ambition. It’s as if the “invisible hand of the market” were somehow immune to these forces and is some benevolent force that will always find balance.

    So basically we are stuck with two evils when it comes to who will administrate basic human needs such as healthcare. Public agencies who tend to be inefficient but are accountable to the people (at least in theory) or the private sector who can be deadly efficient, are accountable to their shareholders and by law have as their main concern their financial well-being.

    So I repeat, watch what you eat, exercise and hope that you don’t get sick. If you think healthcare is broken now you ain’t seen nothing yet!

26. SEB Says:
    February 27th, 2010 at 6:08 pm

    Ditto Michelle, Anthem is one of our lowest payers also, We have had the same CR for the last FOUR YEARS,
    weak economy with less claims being billed to Anthem has not gotten us a CR increase!!!

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