WellPoint Asked To Provide Calif Rate Data To US Senators

February 25, 2010

Lawmakers intensified political pressure on WellPoint Inc. (WLP) as leaders of the Senate Finance Committee asked the health insurer Wednesday to provide data related to planned rate increases on California members with individual policies.

The letter from Senate Finance Committee Chairman Max Baucus (D., Mont.) and ranking member Chuck Grassley (R., Iowa) came the same day that a House subcommittee scrutinized plans by WellPoint's Anthem Blue Cross business to raise individual rates by as much as 39%.

"These rate hikes are particularly troubling when they come at the same time these insurance companies are reaping record profits," Baucus said in a release.

The senators asked WellPoint Chief Executive Angela Braly to provide by March 23 several documents, including a detailed breakout of components of the 2010 premium rate increase in California; the average fee-schedule increase Anthem will pay hospitals and doctors this year; and a table outlining premium increases, medical cost ratios and the distribution of premium increases by consumer policy over several years.

The panel also seeks copies of Anthem's corporate tax return for the past five years and copies of all studies and reports used to determine compensation of officers.

The Baucus-Grassley letter was just the latest weight of political pressure on WellPoint, the nation's largest health insurance company by members.

Earlier, a House Energy and Commerce subcommittee held a hearing on the Anthem rate increases in California, with lawmakers complaining the company has spent millions of dollars on posh corporate retreats and executive compensation while blaming higher medical costs for rate increases.

Braly told the panel in a statement that rates reflect known and anticipated medical costs. An independent actuarial firm reviewed the rate filing and concluded the increases were actuarially sound and the methodology for setting them reasonable, she said.

"Raising our premiums was not something we wanted to do, but we believe this was the most prudent choice given the rising cost of care and the problems caused by many younger and healthier policyholders dropping or reducing their coverage during tough economic times," said Braly.

WellPoint postponed the rate increases, initially set to go into effect on March 1, as state and U.S. officials recently started looking into them.

Also on Wednesday, Health and Human Services Secretary Kathleen Sebelius invited chief executives of the nation's largest publicly traded health insurers, including WellPoint, to a meeting next month to discuss their companies' insurance premiums.

And a U.S. senator from New Hampshire wrote to Braly expressing concern over a report by the center for American Progress that the company plans to raise individual rates in that state by 12%. Sen. Jeanne Shaheen, a Democrat, also has asked the Senate Health, Education, Labor and Pensions Committee to hold an investigation on the reported rate increases.

The letters and hearing came the day before President Barack Obama's planned bipartisan summit aimed at reviving efforts to overhaul the nation's health-coverage laws. He has proposed establishing a federal health-insurance rate authority to help determine whether proposed rate increases are reasonable--a plan the industry opposes.


By:  Dinah Wisenberg Brin
Source: Wall Street Journal