Thursday, July 01, 2010

Business As Usual

After getting its chops busted for outrageously high premium hikes (some as high as 39%) this Spring, Anthem Blue Cross withdrew its proposal after the California Insurance Commission found some errors in the way the premiums were calculated. The company made it clear at the time, however, that because it was losing money on individual policies in California, premiums would still have to rise. The new proposal has been announced:

Eager to avoid another public backlash, Anthem and its corporate parent, Indianapolis-based WellPoint Inc., now are seeking a maximum increase of 20%, with an average hike of 14%. The original proposal called for an average increase of 25%. The new rates would take effect Sept. 1.

While 20% is less than 39%, the premium hike is still significant. People who were paying, say, $500 a month for a health care policy will now be paying $600, or $1,200 more per year. Once again, the company justified the increases by proclaiming that it estimates a loss of $100 million on the individual policies it writes in California. That's a significant chunk of change, but I still can't manage to dredge up any tears for Anthem Blue Cross or its parent company WellPoint, Inc.

WellPoint has posted huge earnings so far this year. The company made $877 million in the first three months of 2010, a 51% increase from the same period last year.

It also boosted compensation in 2009 for Chief Executive Angela F. Braly to $13.1million, a 51% increase from a year earlier, according to a company filing.

The insurance company is in no danger of bankruptcy.

Just to make sure that the profitability continues, the company has decided on a different approach to individual policies in California, one that is so transparent that even I caught it on the first reading:

"The rates do not cover our costs and are not going to be sustainable over the long term, but it made sense to move ahead," said Brad Fluegel, WellPoint's chief strategy officer. "Given the environment, it was in the best interest of everyone to get this behind us and move forward."

But policyholders and consumer advocates who assailed Anthem's initial rate hikes also blasted the new increases as excessive, and fear that Anthem will try to recoup any losses with subsequent rate increases. Company officials said Wednesday they expect a new round of rate hikes in the first half of 2011
[Emphasis added]

In other words, by this time next year the premiums will have been raised by a total which might very approach or surpass the 39% which caused such a furor this Spring. The company will simply do it incrementally, because us frogs won't even notice the water heating up. The Chief Strategy Officer will have earned his pay.

Somebody tell me again why the single payer system for providing health care in this country was never considered.

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