WellPoint Cancels Premium Hikes After Analysis Found It ‘Overstated Future Medical Costs To Justify Increases’

Published on

WellPoint’s premium rate hikes reinvigorated the Democrat’s health care reform push and provided fresh evidence of the need to control rising health care costs and improve the affordability of insurance. But Anthem Blue Blue Cross Blue Shied in California — a subsidiary of WellPoint — is now canceling the scheduled increases after regulators “found that the company overstated future medical costs used to justify increases” and committed numerous other methodological errors. “Correcting the flaws could drop the rate hikes to an average of 15%,” the analysis concluded:

“There will be no rate increases at this point,” Insurance Commissioner Steve Poizner said. “The application was in error. There were all kinds of methodological mistakes.” […]

WellPoint acknowledged the errors in its rate filing, calling them “inadvertent miscalculations.” Anthem, it said, would file new rate increases for individual policy holders in May, but a spokeswoman declined to say exactly when or indicate how large they would be. …The report from the actuarial consulting firm, Axene Health Partners of Winchester, said that, among its errors, Anthem overstated medical costs by inflating the effect of aging. Reworking the numbers could reduce the average rate hike by 10.2%, it found.

For months, WellPoint, along with AHIP, insisted that growing provider costs and the departure of healthier people from the risk pool necessitated the steep increases, but this report helps explain why the rates were so much higher than medical inflation. Even if we bend over backwards and assume that the company was inadvertently making mistakes without checking its math that doesn’t bring us to a comfortable solution. The sheer carelessness of committing “methodological errors” that cost beneficiaries thousands of dollars is appalling, particularly for an industry that spends millions convincing the public it’s moving to contain health care spending.

In too many states, regulators don’t force insurers to live up to their own hype and as a result companies don’t have any incentive to double check their figures or submit lower increases. Democrats have already seized on the story to argue for a national rate review board that could reject unreasonable increases in states that lack such authority, but I suspect that any real action will occur on the state level. State regulators must begin auditing insurers and literally reviewing the math behind premium increases.

Consumer Watchdog has also put out a release urging Congressional investigators to look into “whether Anthem Blue Cross executives made misrepresentations to Congress in testimony claiming the company’s rate increase was actuarially sound,” arguing that if Americans are required to purchase coverage, insurance companies should be required to show that the premiums they charge are reasonable.

If they don’t, more stories about insurer antics and abuses could very will bring about the kind of public option and rate review provisions that Democrat’s weren’t able to stuff in this health care bill.

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

Latest Videos

Latest Releases

In The News

Latest Report

Support Consumer Watchdog

Subscribe to our newsletter

To be updated with all the latest news, press releases and special reports.

More Releases