Friday, April 30, 2010

When Government Works

Yesterday, I posted on the news that WellPoint, the parent company of Anthem Blue Cross, had promised to end its practice of rescission except in cases of obvious fraud. I noted that if WellPoint kept its promise, that would be a good thing and I noted that WellPoint's history with respect to rescissions in California wasn't the best.

WellPoint is in the news again today. An investigation by California Insurance Commissioner Steve Poizner into the outrageous rate hikes for individual policy holders has caused the insurance company to blink once again.

California health insurer Anthem Blue Cross canceled rate hikes of as much as 39% for thousands of California policyholders Thursday after state regulators said the plan was "seriously flawed."

The move came after a consultant to state regulators found that Anthem overstated future medical costs used to justify increases averaging 25% for many of the company's 800,000 customers with individual policies. Correcting the flaws could drop the rate hikes to an average of 15%, the outside analyst said in a report.

"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.

I have no doubt that Anthem Blue Cross will file those rate increases in May, and probably early in the month. It's hard to believe that the mistakes in original plan, the one the Insurance Commissioner dashed, were all that inadvertent. Anthem's technical people know how to calculate premiums based on the California requirement that 70% of each premium dollar go to health care costs and not to administrative overhead and profits. Those technical people could probably put those new rates out tomorrow and just might. There will be rate increases, but at least they will be a slightly more accurate and fair.

This little episode is just one more reminder of the proper role of government. Unrestrained capitalism is destructive to 90% of the populace. Properly regulated capitalism at least gives those of us not born wealthy a shot at a decent life.

One more thing: Steve Poizner is currently running for governor of California and faces Meg Whitman and Tom Campbell in the upcoming Republican primary, but, to be honest, I don't think this was a political move by Mr. Poizner. Throughout his tenure as the state's Insurance Commissioner he has consistently made the right decisions when it comes to insurance practices and insurance rates. He's done a very good job, regardless of his political stance as a conservative. He's entitled to cite this victory over an insurance behemoth in his campaign as evidence of his worthiness as a candidate, and I hope he does.

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