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Waxman takes insurance company to task over proposed premium hikes
House Energy and Commerce Committee Chairman Henry Waxman (D-Calif.) isn't buying health insurance company WellPoint's explanation for a subsidiary's proposed premium increases.
In a letter to WellPoint President and CEO Angela Braley, Waxman and Oversight and Investigations subcommittee Chairman Bart Stupak (D-Mich.) claim that the company's contention that rate hikes were necessary because they had fewer customers doesn't wash with information the firm submitted to the National Association of Insurance Commissioners (NAIC).
WellPoint has been enduring a double-barreled assault from Democrats since Anthem Blue Cross of California, a WellPoint company, announced it planned to raise individual insurance premiums by as much as 39 percent even though the company pulled back and postponed under pressure from Health and Human Services (HHS) Secretary Kathleen Sebelius. Also on Thursday, Sebelius issued an HHS-drafted report detailing other health insurance company premium increases. The insurance industry maintains that premiums are rising because medical costs are growing too fast and that Democratic healthcare reform proposals won't solve the problem.
A WellPoint executive sent a letter to Sebelius last week that, among other things, attributed the rate increases to healthy people dropping coverage because they could not afford it due to the recession. The result, the company said, is that their customer base consisted of more sick people filing medical claims and fewer healthy people paying premiums but not needing benefits.
"The data that WellPoint submitted to the National Association of Insurance Commissioners seems to paint a different picture," Waxman and Stupak claim in their letter. "Enrollment in Anthem Blue Cross policies in the individual market in California appears to have increased significantly — not decreased — in 2009. According to this data, enrollment in Anthem Blue Cross in California increased from 583,967 individual policyholders at the end of 2008 to 627,082 individual policyholders at the end of the third quarter of 2009. This is an increase of over 7%."
Here's the full text of the Energy and Commerce Committee letter:
February 18, 2010
Ms. Angela F. Braly
President and Chief Executive Officer
WellPoint, Incorporated
120 Monument Circle
Indianapolis, IN 46204
Dear Ms. Braly:
We are writing to ask you to address a seeming conflict between WellPoint’s public explanation for the large premium increases the company is seeking in the individual health insurance market in California and the data the company has submitted to the National Association of Insurance Commissioners.
In response to concerns about proposed 39% rate increases, WellPoint has attributed the rate increase in part to the recession, which the company says forced healthy individuals to drop coverage. In a statement released on February 13, 2010, WellPoint stated: “We are … experiencing a higher proportion of healthy individuals choosing not to enroll, leaving an insured pool that utilizes significantly more services.” In a February 11, 2010, letter to Health and Human Services Secretary Kathleen Sebelius, the company wrote: “One dynamic in this challenging economy is that … individuals who do not need services disenroll or choose not to enroll.”
The data that WellPoint submitted to the National Association of Insurance Commissioners seems to paint a different picture. Enrollment in Anthem Blue Cross policies in the individual market in California appears to have increased significantly – not decreased – in 2009. According to this data, enrollment in Anthem Blue Cross in Californiaincreased from 583,967 individual policyholders at the end of 2008 to 627,082 individual policyholders at the end of the third quarter of 2009. This is an increase of over 7%.
We request that you explain why you have asserted that declining enrollment caused by the recession justifies your exceptionally large rate increases when your own data appears to show that your enrollment is growing. As part of your explanation, please provide the enrollment figures for each health insurance product offered by Anthem Blue Cross in the individual market in California, segmenting the enrollment figures by product line for the last five years. Please also indicate the year each product was initially offered and, if applicable, when it was closed to new enrollees.
Please produce the requested information by Monday, February 22, 2010.
If you have any questions regarding this request, please contact Stacia Cardille or Ali Golden with the Committee staff at (202) 226-2424.
Sincerely,
Henry A. Waxman Bart Stupak
Chairman Chairman
Subcommittee on Oversight and Investigations
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