Sebelius Urges States To Re-Examine WellPoint’s Rate Hikes for Errors
HHS Secretary Kathleen Sebelius on Tuesday in a letter to state insurance commissioners and governors urged them to investigate whether mathematical errors helped WellPoint justify large premium increases across the country, the Wall Street Journal reports.
Sebelius' request followed WellPoint subsidiary Anthem Blue Cross of California's move on April 29 to cancel a proposed increase in premium rates for individual policyholders by as much as 39% after an independent state actuary identified multiple filing errors.
According to the California Department of Insurance, WellPoint in some cases overestimated future medical costs and double counted the effect of its policyholders' aging in its calculations.
Sebelius wrote, "In light of this recent finding, I urge that, to the extent you have authority to do so, you re-examine any WellPoint rate increases in your state. Even small errors can mean unaffordable premiums for policyholders." Sebelius noted that the new health reform law allocates $250 million to bolster oversight efforts.
Several states -- including Connecticut, Iowa and New York -- already have begun re-examining recent WellPoint premium increases.
Connecticut Attorney General Richard Blumenthal (D) has asked the state insurance regulator to look again at WellPoint's request to raise individual premiums by an average of 24% last year. In New York, state actuaries have begun looking into the company's filings.
WellPoint increased individual policyholders' premiums by 17% on average last year in New York.
"We're going to see if any alarms go off for us," John Powell, assistant deputy superintendent for health in the state's insurance department, said.
Some states said they also plan to scrutinize increases by other insurance companies. For example, Iowa's insurance division directed an outside actuary to analyze an 18% premium increase proposed by Wellmark Blue Cross and Blue Shield. In addition, Iowa will now request independent reviews for all new proposed premium increases.
WellPoint spokesperson Kristin Binns said calculation errors made in California were "unique to the individual business filing," adding that the company plans to re-submit the filing this month to account for "inadvertent miscalculations" and new standards for insurers contained in the new reform law (Johnson, Wall Street Journal, 5/5).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.