We may be getting closer to the tipping point toward rate regulation of health insurance policies — or so it seemed during Tuesday’s Assembly Health Committee hearing on the steep premium hikes planned by Anthem Blue Cross.
Chair Dave Jones (D) led committee members in an informational inquiry into the “astonishing and troubling” plan for Anthem Blue Cross customers to pay up to 39% more (and in some cases, even more than that) for individual health insurance plans in just 60 days’ time.
Originally, the corporation had notified customers that their monthly bills would jump in less than 30 days, but Anthem Blue Cross agreed to postpone the hike to allow time for elected representatives to question executives. The company still intends to impose the increases.
Today, a House subcommittee of the Committee on Energy and Commerce that is chaired by Rep. Henry Waxman (D) will query Anthem Blue Cross’ parent corporation, WellPoint Inc., of Indiana, about the increased costs to consumers.
WellPoint Chief Executive Angela Braly is scheduled to appear before the subcommittee only a day before President Obama is to bring Democratic and Republican leaders together for what the president hopes will be a fruitful summit on national health care reform. The president’s own proposed plan included rate regulation — and he, on numerous occasions has cited the Anthem increased costs in California as evidence of the need for health care reform.
California has long given health insurance companies a great deal of latitude in operating in the individual market. Anthem Blue Cross executives on Tuesday told the Assembly Health Committee that state Insurance Commissioner Steve Poizner had no issues or questions about the now-controversial 2010 rate increases when Anthem reported its intent to the Department of Insurance last November.
But Anthem executives got a tongue-lashing on Tuesday by California assembly members.
Declaring the rate increase a hardship on California families at a time of economic peril and joblessness, Jones emphatically asked Anthem President Leslie Margolin and Vice President James Oatman: “Have you no shame?”
“The question is disappointing to me,” Margolin replied, and then offered to work with legislators to help drive down costs, particularly those resulting from mistakes by hospitals and doctors.
Jones refused to take the offer seriously. “This is from a company that fought tooth and nail in 2007 when Gov. Schwarzenegger was pursuing health reform for exactly the reasons that bring you here,” Jones said. “The record leaves me considerably doubtful of what the motives are.”
Oatman testified that Anthem Blue Cross had calculated that, with the costly premiums, it would lose 250,000 of its 800,000 individual policy holders in 2010. It also anticipates picking up 250,000 new customers by going after a younger, healthier demographic. Anthem’s share of the individual policy market in California has been growing and it is now the largest in the state.
Oatman said “utilization” by existing customers had gone up in 2009, leading consumer advocates such as Beth Capell of Health Access California to charge that the steep premium increases may be a tool for the practice of “churning” older, more care-seeking customers out by burdening them with unsustainable cost increases.
“Anthem Blue Cross is emblematic of the broken health care system we have,” Capell said, noting that, since 2007, Health Access has been collecting consumer stories and complaints at sickofbluecross.com. “They deliberately churn, they aim for higher cost-sharing, skinny benefits and … ultimately contribute to bankruptcies.”
Oatman downplayed the hardship on households by characterizing the individual market as a temporary stop for people between jobs — or, “a residual transitioning marketplace.”
Assemblymember Mary Salas (D) said, “There’s going to come a time when no one will be able to afford your product. This makes it very, very clear to me that we have to have national health care reform.”
The executives fielded some rapid-fire questions about Anthem Blue Cross’ profits, and how much money it sends out of state to the parent corporation, WellPoint Inc. in Indiana. They refused to disclose the salary ranges of top executives, saying the information was private, and they were fuzzy on numbers sought by Assemblyman Hector De La Torre (D): amounts spent in 2009 on marketing, lobbying, penalties for wrongfully denying claims, staff to investigate consumer records in order to rescind policies, and so on.
Unfortunately for company executives, the hearing occurred on the same day as the Los Angeles Times published an analysis of the company’s regulatory filings that showed that $525 million in Anthem Blue Cross earnings last year were shipped back to Wellpoint. The article supplied many other damning figures to lawmakers, such as the stunning amounts transferred to Blue Cross affiliates in other states.
When the two entities merged in 2004, California leaders worried that the out-of-state, for-profit WellPoint would suck profits from California rather than invest in providing the health care coverage consumers thought they were buying.
WellPoint has 8 million customers signed up with Anthem Blue Cross in California, which is WellPoint’s most profitable entity nationwide. It operates in 14 states.