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In Any State, at Any Time: A Reminder of the Urgency of Health Reform

HHS Secretary Kathleen Sebelius discusses what alarming insurance premium hikes in California show about the need for reform.

In our current health insurance system, too many Americans are at the whim of private, for-profit insurance companies who are raking in billions in profits each year, while policyholders struggle to make ends meet in this tough economy.  Insurance companies can raise premiums or slash benefits, and there's not much families can do about it, especially if they have preexisting conditions that would make it hard to get other coverage.

That is exactly what is playing out right now in California, where Anthem Blue Cross recently announced that on March 1, many of its 800,000 policyholders could see a rate increase of up to 39 percent. What's more, Anthem also declared that it may adjust rates more frequently than once-a-year, making it impossible for families to anticipate and plan for such increases.

For many Californians, including two individuals profiled by the LA Times, this is devastating news. Keith Knueven, a graphic designer in California, is about to see his health insurance rates climb by 37%, from $297 per month to $393.  Mark Weiss, a podiatrist, and his wife will see their annual policy rise from $20,184 to $27,336 -- a 35% increase. And if that weren't enough, as these Americans are facing dramatic rate increases, Anthem's parent company WellPoint reported $2,740,000,000 in profits during the last quarter of 2009.

What's happening in California can happen in any state. It's clear that we need health insurance reform that will give American families the secure, affordable coverage they need and put a stop to insurance company abuses and control out-of-pocket costs. We're closer than ever to reforming our health insurance system.  Now is the time to finish the job.

In the meantime, I think Californians and the American people deserve an explanation, so yesterday, I sent a letter to the President of Anthem Blue Cross. While Anthem has made some comments to the press, they haven't given us the full answer we deserve. I am eagerly awaiting their reply.

The letter I sent to Anthem Blue Cross is below.

February 8, 2010

Leslie Margolin

President, Anthem Blue Cross

Delivered Via Fax

Dear Ms. Margolin,

One of the biggest pressures facing families, businesses and governments at every level are skyrocketing health insurance costs.  With so many families already affected by rising costs, I was very disturbed to learn through media accounts that Anthem Blue Cross plans to raise premiums for its California customers by as much as 39 percent. These extraordinary increases are up to 15 times faster than inflation and threaten to make health care unaffordable for hundreds of thousands of Californians, many of whom are already struggling to make ends meet in a difficult economy.

Your company's strong financial position makes these rate increases even more difficult to understand. As you know, your parent company, WellPoint Incorporated, has seen its profits soar, earning $2.7 billion in the last quarter of 2009 alone.

I believe Anthem Blue Cross has a responsibility to provide a detailed justification for these rate increases to the public. Additionally, you should make public information on the percent of your individual market premiums that is used for medical care versus the percent that is used for administrative costs.  Policy holders in the individual market deserve to know if their premium increases would be invested in better medical care or insurance company overhead costs like salaries, profits, and advertising. I am aware that the State of California is investigating this matter, and urge Anthem Blue Cross to cooperate fully. In the meantime, I will be closely monitoring the situation.

At a time when health care costs are a critical threat to families as well as the nation's economy, I hope you appreciate the urgent nature of this request. I look forward to your prompt reply.


Kathleen Sebelius
Secretary of Health and Human Services


Kathleen Sebelius is Secretary of Health and Human Services