House Committee Challenges WellPoint CEO on Rate Hikes
On Wednesday, Democrats on the House Energy and Commerce Oversight and Investigations Subcommittee sharply questioned WellPoint CEO Angela Braly about planned premium increases for California residents who purchase individual policies from Anthem Blue Cross, a WellPoint subsidiary, CQ HealthBeat reports.
Premiums could rise by as much as 39% for some California residents enrolled in Anthem plans if the hikes are implemented (Reichard, CQ HealthBeat, 2/24).
Anthem -- which covers eight million California residents including 800,000 who purchase policies in the individual market -- said it would postpone the rate increases from March 1 to May 1 as state regulators review the plan (Fram, AP/Philadelphia Inquirer, 2/24).
At a hearing of the California Assembly Health Committee on Tuesday, Anthem executives said they planned to go ahead with the rate hikes once the state investigation concludes (California Healthline, 2/24).
Line of Questioning
Committee Democrats took aim at WellPoint's fiscal year 2009 profit and executive compensation packages (Fram, AP/Philadelphia Inquirer, 2/24).
Energy and Commerce Committee Chair Henry Waxman (D-Calif.) said a review of company documents showed that 39 WellPoint executives received salaries of $1 million or more and that the insurer spent $27 million on company retreats (Lochhead, San Francisco Chronicle, 2/25).
In response to questioning from Rep. Jan Schakowsky (D-Ill.), Braly said that her annual salary is $1.1 million and that she also received $8.5 million in stock options and received an annual incentive payment of $73,000 in 2009 (Welna, "All Things Considered," NPR, 2/24).
The subcommittee also heard from California residents who described the impact the proposed rate increases would have.
Waxman said that health plan premiums are "breaking our middle class" and "will bankrupt our nation." He added, "WellPoint documents point to a future of even higher rate increases" (CQ HealthBeat, 2/24).
Braly Defends Planned Rate Hikes
Braly blamed the planned increases on the growing costs of hospital care and medications and the ailing economy, which she said has prompted many young, healthy individuals to drop their coverage, leaving the insurer with a pool of older, sicker residents who tend to have higher medical costs (AP/Philadelphia Inquirer, 2/24).
WellPoint Chief Actuary Cynthia Miller also noted that the insurer is losing money on several of its policies and that the proposed rate hikes apply to only 5% of the company's business (CQ HealthBeat, 2/24).
Braly said, "The increases we're seeing in California are due to factors that we've been sounding the alarm about for years: the rise in health care costs and healthy people opting out of the system when other issues arise, such as the tough economic times we're experiencing today" ("All Things Considered," NPR, 2/24).
Increasing premiums "was not something we wanted to do ... [b]ut we believe this was the most prudent choice given the rising cost of care," Braly said.
Push for Health Care Reform
Waxman used the hearing to stress the importance of enacting a broad health overhaul noting, "If we fail to pass health reform, insurance rates will skyrocket and health insurance will become so expensive only the most healthy and most wealthy will be able to afford coverage" (Hotakainen, McClatchy/Sacramento Bee, 2/25).
Braly said she agreed with Democrats about the need for reform but criticized their proposals for inadequately addressing the growing cost of care (AP/Los Angeles Times, 2/24).
Sebelius Invites Insurers To Discuss Hikes
On Wednesday, HHS Secretary Kathleen Sebelius sent a letter to the heads of five insurers -- UnitedHealth, WellPoint, Aetna, Health Care Service Corporation and CIGNA -- inviting them to discuss planned premium increases across the country.
Sebelius said she would host a meeting with the insurance representatives on March 3 that she hopes "will provide an opportunity to discuss how health insurance reform can bring down health care costs and fix our broken health insurance system," the letter states (Frates, "Live Pulse," Politico, 2/24).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.