Memo To Giant Health Insurance Companies

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RACHEL MADDOW: Memo to giant health insurance companies. The middle of an acrimonious months-long political fight over reforming your industry is probably not the best time to try to sneak in a massive rate hike.


BARRACK OBAMA, PRESIDENT OF THE UNITED STATES: One of the major insurers in California just announced that in the individual market, they’re increasing their premiums by 39 percent. That’s a portrait of the future if we don’t do something now.

Anthem Blue Cross, which is the largest insurer in the largest state, California, is planning on raising premiums for many individual policyholders by as much as 39 percent. If we don’t act, this is just a preview of coming attractions.


MADDOW: America, meet Anthem Blue Cross of California, the latest real-life talking point for health reform proponents, including, of course, President Obama, who has specifically targeted the company twice so far this week.

But being the real-life example of why we need health reform isn’t a new experience for Anthem’s parent company, WellPoint. An un-ambitious Google news search for WellPoint headlines just from the past year or so turns up stuff like this.

Last January, WellPoint was banned from adding people to Medicare rolls after it was found to have denied prescription drugs to elderly patients, endangering their lives in the process. In April, WellPoint’s anti-health reform corporate strategy was written up. They spent 3 million Robo calls out to round up opposition to health reform.

In September, the group Consumer Watchdog alleged that the company was pressuring its own employees to write and call members of Congress to oppose reform. In October, an internal WellPoint memo announcing cuts to its own employees’ health benefits made its way to Bloomberg News. That same month, one of WellPoint’s Anthem Blue Cross/Blue Shield subsidiaries decided to sue the State of Maine for the right to raise premiums by more than 18 percent. The 10.9 percent increase approved already by Maine’s insurance superintendent apparently
wasn’t enough for WellPoint’s bottom line.

But this week’s controversy, the rate hikes in California, might amount to more than a bad news cycle for WellPoint. Since the president started calling out the company, the public’s scrutiny of WellPoint has increased exponentially. Congressman Henry Waxman and Bart Stupak have launched an investigation into Anthem’s California rate hike. They have cordially invited the WellPoint CEO to testify at a hearing on February 24th.

The California state legislature is also investigating. Their hearing is set for the day before, the 23rd. The California insurance commissioner is also looking into the company. He wants them to postpone the rate hike while an independent actuary reviews it.

Democratic Senator Barbara Boxer of California has asked California’s attorney general to investigate as well as to see if the rate hike breaks state law.

California’s other senator conservative Democrat Dianne Feinstein called the rate hike unconscionable. She asked state lawmakers to give the insurance commissioner of the state the power to regulate rates.

And then there’s Health and Human Services Secretary Kathleen Sebelius who wrote a letter to Anthem this week demanding a detailed justification for the hike. She also blogged about it on the White House blog, using WellPoint and Anthem as an example of, quote, “how too many Americans are at the whim of private, for profit insurance companies who are raking in billions in profits each year while policyholders struggle to make ends meet in this tough economy”.

Just for good measure, the secretary then went on TV, to give the insurance giant another gut punch yesterday with our friend Ed Schultz here on MSNBC.


KATHLEEN SEBELIUS, U.S. SECRETARY OF HEALTH & HUMAN SERVICES: You have 800,000 folks in California who are in the individual market trying to buy insurance on their own. And they’ve just gotten the notification from this giant company, a company by the way whose parent declared record profits last quarter of $2.7 billion. So they’re making a little money along the way.

Their rates are going to go up 39 percent on average which will price a whole lot of people out of the market. They basically have been dumped out of the insurance market by an insurance company and I want to know why.

I want to know what their loss ratio is, how much of that money they’re spending on paying medical claims and how much they’re planning on paying the two top CEO’s at WellPoint, who both make just under $10 million a piece. How much of this goes to advertising and promotion and CEO salary, and how much is going for health claims and why in the world are we pricing these people out of the market?


MADDOW: Those are what the kids call fighting words. And if that doesn’t make WellPoint and Anthem worried about their rate hike stunt in California, Secretary Sebelius’s record on this issue should.

There’s sort of an incredible back story here. Eight years ago this month, now Secretary Sebelius was Kansas Insurance Commissioner Sebelius and she was in the process of blocking what seemed at the time like an inevitable takeover of the state’s largest insurer, which operated as a nonprofit by a giant for profit company. She wanted to block it because she found evidence that the merger would have meant higher insurance premiums for the residents of Kansas.

Her decision to block the merger was a huge political shock. It was appealed and ultimately upheld by the Kansas Supreme Court. She was lauded by newspapers across the state as courageous, she was then elected governor of Kansas after campaigning as a candidate who had the guts to stand up to the big insurance industry and tell them no.

We have no way of knowing if with this rate hike, WellPoint is feeling scared of Secretary Sebelius. Of course, we’re all hoping that they still should be.

Consumer Watchdog
Consumer Watchdog
Providing an effective voice for American consumers in an era when special interests dominate public discourse, government and politics. Non-partisan.

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