Steep Rate Increases By Anthem Blue Cross Under Scrutiny

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SUZANNE MALVEAUX, CNN STUDIO HOST:  Well, consumers say they’re seeing steep increases in their health insurance premiums, and one insurer raised rates as much as 39 percent for some customers after making almost $3 billion in profit in the last quarter alone. Our Mary Snow, she’s been looking into this for us.

Obviously, a lot of people thinking, are you kidding me? What is this? What’s going on?

MARY SNOW, CNN NEWS CORRESPONDENT: Yeah, Suzanne, getting a lot of attention. The insurance, a unit of WellPoint, it’s coming under intense scrutiny for this double digit increase in premiums. Now, the company has come out defending its latest move, but the secretary of Health and Human Services still remains skeptical about the explanation.


(voice-over): As a doctor, Mark Weiss knows all about difficult decisions his patients confront, but it’s his own health care dilemma that he’s now grappling with. Weiss’ health insurance provider, Anthem Blue Cross, recently informed him his premium was being raised from $1,682 a month to $2,078.

MARK WEISS, ANTHEM BLUE CROSS CUSTOMER: Which is about, what, $6,000 a year in increased premiums. And, you know, the bottom line is that that’s a big hit. That’s a big hit no matter what happens in anybody’s life.

SNOW: Adding to Weiss’ woes, his medical history includes treatment for cancer.

WEISS: They have me cornered, I’m between a rock and a hard place with them. How is it a rock and a hard place? I can’t apply for insurance anywhere else.

SNOW: Weiss is one of the estimated 600,000 Californians affected by Anthem Blue Cross rate hike of as high as 39 percent on individual policy holders. And it got the attention of President Obama who cited it to bolster his argument for health care reform.

BARACK OBAMA (D), UNITED STATES PRESIDENT: If we don’t act, this is just a preview of coming attractions.

SNOW: Kathleen Sebelius, the secretary of Health and Human Services, demanded that the parent company of Anthem Blue Cross, which is WellPoint, explain why it needed such a big rate hike after posting a $2.78 billion profit in the final
quarter of 2009.

WellPoint responded in the letter saying the rates "reflected anticipated medical costs" and that they relate "only to the individual insurance market where individuals purchase coverage on their own (not through their employer), which represents approximately 10 percent of our more than eight million members in California."

WellPoint cites the challenging economy saying it’s driving more people to opt out of insurance. The company declined the request for an interview. But a lobbyist for the California Association of Health Underwriters says other insurers are facing similar circumstances.

STEVEN LINDSAY, CA ASSGN OF HEALTH UNDERWRITERS: The sick stay and the well leave and so you end up having a smaller pool to pay for more costs.

SNOW: But Jerry Flanagan, of Consumer Watchdog, a group endorsing regulation, says the rate hikes are about making a profit.

JERRY FLANAGAN, CONSUMER WATCHDOG: This is not just Anthem. Insurance companies across the board will absolutely follow anthem’s lead.


SNOW: Suzanne, the customers being affected right now are people who are buying their own insurance and can’t get insurance through an employer. Now, this hike is expected to come under further scrutiny later this month when the House Energy and Commerce Committee addresses it at a hearing — Suzanne.

MALVEAUX: Thank you very much, Mary.

Consumer Watchdog
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