Health and Human Services Secretary Kathleen Sebelius has asked Anthem Blue Cross to publicly justify an increase in their monthly premiums by up to 39 percent for Californian customers.
“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 in a difficult economy,” Sebelius said in a letter issued Monday.
“Your company's strong financial position makes these rate increases even more difficult to understand,” she wrote in the letter to Leslie Margolin, Anthem's president. “As you know, your parent company, WellPoint Incorporated, has seen its profits soar, earning $2.7 billion in the last quarter of 2009 alone.”
“I believe Anthem Blue Cross has a responsibility to provide a detailed justification for these rate increases to the public,” Sebelius wrote. “Additionally, you should make public information on the percent of your individual market premiums that is used for medical care versus the percent that is used for administrative costs. Policy holders in the individual market deserve to know if their premium increases would be invested in better medical care or insurance company overhead costs like salaries, profits, and advertising.”
“At a time when healthcare costs are a critical threat to families as well as the nation's economy, I hope you appreciate the urgent nature of this request. I look forward to your prompt reply,” the letter concluded.
Anthem Blue Cross has responded to media inquiries, saying that the company will reply to Sebelius promptly.
Anthem notes that individual medical insurance premiums do not reflect an individual member's personal claims experience; therefore, as medical costs increase across member population, premium increases to the entire membership pool result.
“Unfortunately, in the weak economy many people who do not have health conditions are foregoing buying insurance,” said Anthem. “This leaves fewer people, often with significantly greater medical needs, in the insured pool.”
“We regret the impact this has on our members,” said Anthem. “It highlights, why we need sustainable healthcare reform to manage the steadily rising costs of hospitals, drugs and doctors.”
The company is engaging with a broad range of key stakeholders across California to discuss the state's individual insurance market and share ideas on how to collectively partner on meaningful change.