Health chief asks insurer to justify rate hike

LOS ANGELES (AP) — The Obama administration Monday asked California’s largest for-profit health insurer to justify plans to increase customers’ premiums by as much as 39 percent, a move that could affect about 800,000 people.

In a letter to the president of Anthem Blue Cross, Health and Human Services Secretary Kathleen Sebelius said she was disturbed to learn of the planned increases, calling them “extraordinary.”

“I believe Anthem Blue Cross has a responsibility to provide a detailed justification for these rate increases to the public,” Sebelius wrote.

She said the company should also make public what percentage of customers’ premiums go to medical care versus administrative costs.

In a statement, Anthem Blue Cross of California blamed the weak economy and rising health care costs for the rate increase, while pledging to reply to Sebelius’ questions promptly.

The rate increase “highlights why we need sustainable health care reform to manage the steadily rising costs of hospitals, drugs and doctors,” the statement said.

Sebelius said Anthem Blue Cross’ parent company, WellPoint Inc., “has seen its profits soar, earning $2.7 billion in the last quarter of 2009 alone.”

Not counting about $2.2 billion it gained from the sale of a pharmacy benefit management subsidiary, WellPoint earned $536 million in the final three months of last year.

In a rare move, California Insurance Commissioner Steve Poizner is hiring an outside actuary to determine whether Anthem is abiding by state regulations and spending at least 70 percent of premium dollars on medical care as opposed to administrative costs.

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