While health insurance reform is stalled on Capitol Hill, Department of Health and Human Services (HHS) Secretary Kathleen Sebelius is taking matters into her own hands.
Anthem Blue Cross of California recently announced a 39 percent increase in premiums for some of its customers. Sebelius queried the company last week over the hike, demanding a public explanation.
In a letter to the parent companyWellPoint Inc., Sebelius questioned the steep premium increase in the face of reported 2009 fourth quarter earnings of $2.7 billion.
"As we continue the health insurance reform debate in Washington, this announcement reminds us that too many Americans can be left with unaffordable insurance each time the rates or rules change in the private market," Sebelius said. Sebelius served as the Health Insurance Commissioner of Kansas for eight years.
"It's clear that we need health insurance reform that will give American families the secure, affordable coverage they need," she added.
On Saturday, Anthem announced it would delay the premium hike for two months.
Since last Friday, nearly 200,000 members of the political advocacy group, MoveOn signed a petition demanding a public explanation from Anthem Blue Cross over the premium hike.
In a Monday email to its 5 million members, MoveOn leaders said, "The pressure is working. But a short delay isn't enough-and the company is still providing no explanation for this ridiculous rate hike."
"They're hoping this small concession will appease the public, so we've got to show them that they're wrong," leaders of MoveOn wrote.
Robert Zirkelbach, press secretary for America's Health Insurance Plans said Monday Anthem's profits need to be put into context.
According to SEC data, nine of the Fortune 500 health plans reported an average of 3.9 percent profit margin in the fourth quarter of 2009. In 2008, those same companies reported a 3.1 percent profit margin, Zirkelbach said.
Five of the nine companies actually saw a decline in their profit margin - averaging a decline of 47.2 percent in profit margin from 2008 to 2009, according to Zirkelbach.
AHIP also reported that according to Yahoo! Finance's latest analysis of quarterly financial data, the net profit margin for the entire healthcare sector is 11.1 percent.
Using the same index, health plans have a 3.4 percent net profit margin - 226 percent less than the entire healthcare sector, AHIP said.