Anthem Blue Cross of California is seeking to justify its 39% rate increase for individual members in a five-page letter to HHS Secretary Kathleen Sebelius. The rate increase will affect 10% of members in California, according to the insurer, and reflects the challenges of covering a sicker, aging population on the individual market in a down economy.
Anthem defends rate increase to HHS chief
The insurer's profit margins are in line with competitors in the state, with net income on a per-member, per-month basis of $12.62 in 2008, according to the letter.
“Clearly, we understand that these increases create a challenge for many of our members,” wrote Brian Sassi, president and CEO of the Consumer Business Unit at WellPoint, the parent company of Anthem Blue Cross of California. “However, it is important to know that our members often have a choice of coverage.”
Sebelius said in a written statement that she isn't buying the Woodland Hills, Calif.-based insurer's explanation. “It remains difficult to understand how a company (WellPoint) that made $2.7 billion in the last quarter of 2009 alone can justify massive increases that will leave consumers with nothing but bad options: pay more for coverage, cut back on benefits or join the ranks of the uninsured,” Sebilius said. “High healthcare costs alone cannot account for a premium increase that is 10 times higher than national health spending growth.”
The rate hike has become a touchstone for lawmakers, with leading Democrats planning hearings in Congress and in the California Legislature on the issue in the coming weeks.
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