As the United States continues to struggle to pull itself out of the current economic quagmire, it’s good to know that not all American companies are behaving like times are tough. Take Anthem Blue Cross of California, who announced this week that individual policy holders will see an average premium increase of 25% with some rate hikes set to reach 39%, prompting Congress and the White House to demand an immediate explanation.

A rep for Anthem’s parent company, healthcare behemoth WellPoint, released a letter outlining their reasoning. Among the points in the letter to Health & Human Services Secretary Kathleen Sebelius:

• The rate increases being reported in the media relate only to the individual insurance market, which represents less than 10% of our California members.

• Anthem operated at a loss in its individual business in California during 2009.

• An independent actuarial firm examined our rates and concluded they are both sound and necessary, reflecting the expected medical costs associated with membership in these plans. They meet or exceed the medical loss ratio required by California law.

• Our members have choice in coverage, and we work with them to find the best options for their needs. As a result, our products are very competitively priced when compared with other California plans, including our two largest not-for-profit competitors.

• A higher proportion of healthy individuals are choosing not to enroll, leaving an insured pool that utilizes significantly more services. This is why we need an effective personal coverage requirement.

Not surprisingly, Sebelius was not impressed.

“It remains difficult to understand how a company that made $2.7 billion in the last quarter of 2009 alone can justify massive increases that will leave consumers with nothing but bad options,” the Secretary responded. “High healthcare costs alone cannot account for a premium increase that is 10 times higher than national health spending growth.”

Senate Majority Leader Harry Reid of Nevada echoed this sentiment. “It means that more people won’t be able to afford any coverage at all,” said Reid. “It means more people will be living just one accident, one injury or one pink slip away from losing everything.”

Congress will take up this issue with a hearing before the House Committee on Energy and Commerce scheduled for Feb. 24, one day after the California Assembly’s health committee conducts its own hearing.

Is Anthem/WellPoint justified in raising rates? Beyond that, does Congress have the right to intervene?

Anthem’s parent company defends health insurance rate hike [L.A. Times]

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