Anthem Blue Cross tries to explain price hike

February 11, 2010 7:01:04 PM PST
Anthem Blue Cross is responding to demands from lawmakers that they justify steep rate increases for about 800,000 Californians.

Last week, the state's largest for-profit health insurer sent out letters notifying policyholders of potential rate increases of up to 39 percent, effective March 1. The rate hike is limited to individual Anthem Blue Cross, those who are not covered by employer or group policies, which make up about 10 percent of the company's California clients.

In a letter to U.S. Department of Health and Human Services Secretary Kathleen Sebelius, Brian Sassi, the CEO of Wellpoint, which owns Anthem Blue Cross, wrote that he "appreciates the opportunity to explain why rates" will be increased substantially for individual members.

Sassi then offered several justifications, including: losses suffered in its individual business in California; increasing medical costs in the delivery system and the fact that an increasing number of healthy individuals are choosing not to enroll, leaving an insured pool that utilizes significantly more services.

After reviewing the list of justifications from Anthem Blue Cross, Joe Ridout from San Francisco's Consumer Action told ABC7, "I can't think of a more vivid illustration of why an individual mandate is necessary for health care reform."

Darrel Ng, from the California Department of Insurance, says Insurance Commissioner Steve Poizner stands by his request earlier this week that Anthem Blue Cross put off their premium increase until May. 1.

"We continue to hope that Anthem Blue Cross delays their rate hike so the state can scrutinize their rate hike," Ng said.