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Home > BizTimes Daily > Archives > February 25, 2010
Anthem Blue Cross plans 17.2% rate hike for Wisconsin customers
Published February 25, 2010 - BizTimes Daily
The Obama administration recently used the news that Anthem Blue Cross in California plans to increase its premiums by up to 39 percent as fuel to reignite the debate over health care reform.
That fuel is likely to soon grow far more combustible.
According to a new report by the Center for American Progress Action Fund, Indianapolis-based Wellpoint Inc and its Anthem Blue Cross subsidiaries are planning to hike individual health care insurance premium rates by double-digit percentages in at least 11 states later in 2010, including Wisconsin, California, Colorado, Connecticut, Georgia, Indiana, Maine, Nevada, New Hampshire, New York and Virginia.
“There are also signs that WellPoint has substantially increased rates on ‘small group’ policies, which cover small businesses with up to 50 employees,” stated the report, which was compiled by researcher Scot Paltrow.
Anthem Blue Cross and Blue Shield of Wisconsin has filed a notice with the Wisconsin Office of the Insurance Commissioner that the company intends to increase its composite premiums in Wisconsin by 17.2 percent, effective April 1, 2010.
The company projects a 17.2-percent composite rate increase for its Blue Access, Blue Economy, Blue Value, and Blue Preferred Plus products in Wisconsin.
According to the company’s Jan. 12 filing, the increase will affect 13,406 Blue Cross and Blue Shield policyholders in Wisconsin who will see a combined $8.3 million in premium hikes.
The news about the skyrocketing premiums came as President Barack Obama convened a bipartisan summit about health care reform in Washington, D.C., today.
WellPoint reported a $4.7 billion profit for 2009, nearly double its profit for 2008.
“The rate hikes in California have resulted in an array of criticism from lawmakers. President Barack Obama called the planned California hikes ‘jaw dropping’ in his February 20 weekly radio address, and he called in his health care proposal unveiled on February 22 for a newly created federal Health Insurance Rate Authority to regulate rates,” the report stated. “Recent earnings reports show that the health insurance industry has been doing well overall despite the downturn in the economy. The nation’s five largest health insurers increased their profits by 56 percent in 2009 to $12.2 billion.”
America’s Health Insurance Plans, a health insurance lobbying organization, blamed recent premium increases on rising medical costs. AHIP president Karen Ignagni said, “Health insurance premiums are increasing in the individual market because of soaring medical costs and because younger and healthier people are dropping their coverage due to the economy.”
The Center for American Progress Action Fund report concluded: “WellPoint’s double-digit premium rate increases in the individual market are further evidence that health reform is needed. Reform is crucial for those in the individual market since premium rates are less stable and it is more difficult for some to purchase coverage. Insurance companies are still allowed to drop coverage when a person gets sick and to deny coverage based on a pre-existing condition. The health reform bills currently before Congress take steps to rein in insurance company abuses, make them more transparent and hold them accountable, and make health coverage more affordable to those who need it most.”
In response to BizTimes Milwaukee’s questions about Wellpoint’s filings for premium increases in Wisconsin, Anthem Blue Cross and Blue Shield spokesman Scott Larrivee issued the following response today:
“We understand and share the concerns of our members over rising health care costs and higher premiums. Anthem Blue Cross and Blue Shield (Anthem) is investing in many initiatives to reduce the cost of care, promote wellness and preventive care for our members and communities, and work with providers to encourage high-quality, evidence-based care, that costs less over time. In addition, our networks offer members significant savings through access to a large number of health care providers across the country. These efforts, however, cannot completely offset all the increases linked to the cost of care. The pricing structure of our individual products is a reflection of the medical risks, benefit mandates and costs associated with this market. As the cost of care increases, premiums rise accordingly.
“Anthem complies with all state regulations regarding rate adjustments. It is important to understand that this year’s rate increases were impacted by new state mandates, such as: autism, changing dependent age to 27, and hearing aids. While these mandates provide valuable benefits to those who need these services, mandates do increase the cost of health insurance policies for all individuals. Individual market premiums are also a symptom of a larger underlying problem in the individual market - rising health care costs.”
Larrivee said health insurance rates increase year-over-year to reflect general medical inflation and other factors, including: provider (doctors and hospitals) prices increasing faster than general inflation; increases in consumer utilization; provider price increases above general inflation are driven largely by increased provider cost-shifting to private health insurers due to Medicare and Medicaid not fully covering provider costs; provider consolidation and higher-priced technologies; and increases in consumer utilization are driven largely by an aging population, lifestyle choices that result in chronic diseases, new treatments and more intensive diagnostic testing.
“One dynamic to note in this challenging economy is that individuals are far more likely to keep their coverage if they are less healthy and require ongoing medical services, and a higher proportion of individuals who do not need services disenroll from their health coverage or choose not to enroll in health coverage,” Larrivee said. “The result of this dynamic is an insured pool that utilizes significantly more services per individual. This is another factor that leads to higher costs in the insured pool and to rate increases higher than general medical inflation.”
Wellpoint’s plan to increase premiums in Wisconsin and 10 other states drew criticism from organized labor officials.
The Service Employees International Union said WellPoint has led the opposition to health care reform in Washington, D.C., spending $4.7 million on lobbying in 2009, the largest in the industry. WellPoint also funneled more than $1 million to the U.S. Chamber of Commerce to fund negative health care reform “attack ads,” the SEIU said.
“Without reform that guarantees quality affordable health insurance, companies such as WellPoint will continue to exploit working families in Wisconsin,” said Mike Thomas, president of the SEIU Wisconsin State Council. “This is a reminder that we must renew our struggle for national health care reform.”
To view the Center for American Progress Action Fund report, visit http://www.americanprogressaction.org/issues/2010/02/pdf/wellpoint.pdf.
To view Wellpoint’s Wisconsin rate increase filings, visit https://ociaccess.oci.wi.gov/Companyfilings/document?docid=158764&filid=170673.
