Anthem Blue Cross of California Rate Hikes Spark Outcry

Angela Braly, CEO of WellPoint, is heading to the hot seat on Capitol Hill on Feb. 24 to testify before the House Ways & Means Committee and its Subcommittee on Oversight and Investigations about planned rate hikes at its Anthem Blue Cross unit in California.

Anthem Blue Cross recently informed many of its approximately 800,000 individual policyholders that premiums would increase by as much as 39% on March 1. Anthem also informed members that it might start adjusting premiums more often than once a year.

President Obama decried the move in a pre-Superbowl interview with Katie Couric, and HHS Secretary Kathleen Sebelius also has called for an explanation of the rate hikes. Back in California, Insurance Commissioner Steve Poizner (R) — a gubernatorial hopeful — has asked for a delay to the rate hikes while an independent investigation is undertaken.

Proponents of Democratic health care reform proposals in Congress say Anthem Blue Cross’ planned rate hikes underscore the need for reform, especially in terms of rising health insurance costs.

In an explanation of the premium increases, Anthem told HHS that the recession prompted many members to suspend their policies, thus creating a smaller pool of beneficiaries.  Anthem noted that beneficiaries who retained coverage tend to have greater health needs than those who dropped benefits.

The Senate and House reform bills seek to tackle that issue by requiring people to have insurance coverage, but the cost of health care remains an issue. 

In addition, the bills would require insurers to spend set percentages of premium income on medical care or give rebates to members.  The House bill sets the percentage at 85% for all plans.  The Senate bill would require large group plans to hit the 85% threshold, but would require plans for small groups and individuals to spend only 80% of premium income on medical services.

Perhaps more appealing to supporters of the Democrats’ legislation in this case, both bills would subject rate increases to a review.

In an interview with the Wall Street Journal that ran in the weekend edition, Braly did not address Anthem Blue Cross of California’s rate hikes directly, but she did explain her stance on overhaul bills in Congress, arguing that the current reform proposals don’t do enough to control the rising costs of health care services, prescription drugs and medical devices. 

Right now it’s unclear whether the medical-loss ratio and premium rate review provisions will stay in reform legislation or if provisions directly addressing costs of services, medications and devices will be beefed up. President Obama’s upcoming health care summit might help clear things up, or clarity on the issue might be farther down the road.

Criticism in the Senate

  • On Feb. 4, Sen. Mary Landrieu (D-La.) took to the Senate floor in an effort to defend the so-called “Louisiana Purchase” provision in the Senate’s health care reform bill, which would provide her home state with $300 million in additional Medicaid funding, Roll Call reports. Landrieu said that recent suggestions that the provision was added to the bill to secure her vote were untrue and insisted that the provision was not a secret deal that she forged with the Democratic leadership. She added that the provision was developed in public through the lobbying efforts of the entire Louisiana congressional delegation and Gov. Bobby Jindal (R) (Drucker, Roll Call, 2/4).
  • During a private meeting of Senate Democrats with White House senior adviser David Axelrod and other Democratic officials and strategists on Feb. 3, Sen. Al Franken (D-Minn.) expressed frustration with the Obama administration’s failure to provide guidance on health reform legislation, Politico reports. According to sources present at the meeting, Franken directed most of his criticism and displeasure at Axelrod (Raju/Barr, Politico, 2/4).

Dollars and Cents

  • On Feb. 3, Republicans on the House Ways and Means Health Subcommittee questioned Treasury Secretary Timothy Geithner about proposals in health reform legislation that they said would threaten jobs, CQ HealthBeat reports. Rep. Wally Herger (R-Calif.) said, “The House-passed health care overhaul bill (HR 3962) raises taxes by more than $732 billion. Using the methodology developed by Christina Romer, President Obama’s top economic adviser, these tax hikes could cost the country five million jobs, something Republicans find unacceptable.” Geithner said, “There is not a chance that a reasonable independent economist would look at that package of measures and suggest that would be the impact over time” (Reichard, CQ HealthBeat, 2/3).
  • Some health care industries that had agreed to savings and cutbacks in the push for reform — with the expectation that reform legislation would help their industries by increasing the industries’ customer bases — are concerned that those cuts could be enacted even if overhaul legislation fails, CongressDaily reports. Some fear that those savings could be used by lawmakers to offset the costs of closing the coverage gap in Medicare prescription drug benefits or to pay for a Medicare physician reimbursement fix (Edney, CongressDaily, 2/3).

Shaping the Debate

  • Groups that had recently launched advertisement campaigns — including pharmaceutical groups and business organizations — related to health reform legislation have reduced the number of ads as health reform legislation appears less certain, the AP/Washington Times reports (Fram, AP/Washington Times, 2/3). According to Evan Tracey, who monitors political advertising for the Campaign Media Analysis Group, some health care groups are now spending approximately $1 million weekly, down from $1 million daily during the peak of the reform debate (Fritze, “On Politics,” USA Today, 2/2).
  • As comprehensive health reform legislation stalls, drugmakers are increasingly concerned over the effect piecemeal reform legislation could have on their industry, the New York Times reports. According to the Times, drugmakers will be forced to adjust more quickly to legislation, as opposed to the “carefully mapped future” they had under the original reform bills (Wilson, New York Times, 2/5).
  • Conservatives for Patients’ Rights, a group founded by former health care executive Rick Scott to lobby against Democrats’ reform proposals, announced that it will limit its presence now that a public insurance option appears unlikely to gain approval from Congress, The Hill‘s “Blog Briefing Room” reports (Zimmermann, “Blog Briefing Room,” The Hill, 2/2).
  • GlaxoSmithKline CEO Andrew Witty recently said that comprehensive health care reform legislation likely will not pass until 2011 because of continuing uncertainty, the Wall Street Journal reports. Witty said that reforms need to “tackle the value of consumption” of health care services and make sure that quality matches cost, noting that drugs should have to prove that they provide good value for the money spent (Whalen, Wall Street Journal, 2/4).


  • A new NBC/Wall Street Journal poll released in February shows decreased enthusiasm among voters for the Democrats’ health care reform legislation, Politico‘s “Live Pulse” reports. According to the poll, 46% of respondents said they felt Democrats’ health reform plan is a bad idea, while 31% said they think the plan is a good idea. Forty-nine percent of the voters surveyed said it would be a step back for the country if proposed reform legislation became law, compared with 44% who felt it would be a step forward (Frates, “Live Pulse,” Politico, 2/2).
  • A new poll released on Feb. 2 by Public Policy Polling found that in a national survey of 584 registered voters, 45% said they would vote for a Republican congressional candidate in upcoming elections if health reform does not pass, compared with 40% for a Democratic candidate. Thirty-six percent said they support President Obama’s plans for a health system overhaul, compared with 51% who oppose such a plan (Barr, Politico, 2/2).
  • Most U.S. residents do not believe comprehensive health reform legislation is going to pass this year, but a small number of people are growing more optimistic, according to a poll by the Pew Research Center, the New York Times’ Prescriptions” reports. The survey, conducted from Jan. 29 to Feb. 1, found that 60% of respondents believe health reform will not pass this year, which is fewer than the 67% who said the legislation would not pass in a poll conducted immediately after the Jan. 19 special election in Massachusetts (Seelye, “Prescriptions,” New York Times, 2/3).


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