Sebelius: Insurance Rate Hikes Justify Health Care Reform

BY Bridget DeSimone  February 18, 2010 at 5:56 PM EDT

Health and Human Services Secretary Kathleen Sebelius unveiled a new government report Thursday that warned of a double-digit spike in health insurance premiums.

The increase “shines a light on the urgency for health care reform” and reveals that large insurance companies are profiting hugely from the hikes in the individual healthcare market, she said in a news conference.

The report, titled “Insurance Companies Prosper, Families Suffer: Our Broken Health Insurance System” details premium increases for individual policy holders in seven states: Connecticut, Maine, Michigan, Oregon, Rhode Island, Washington and California.

The HHS report targeting insurers is part of the Obama administration’s latest push to revive health care reform legislation. President Obama will hold a bipartisan health care summit on Thursday, Feb. 25, a day after House Ways and Means Committee members will question Angela Braly, president and CEO of the insurer Wellpoint.

Wellpoint has been the center of a firestorm recently over news that its Anthem BlueCross division in California would be raising premiums for some 800,000 policy holders by about 25 percent on average, but as much as 39 percent for some customers. The insurance company’s move drew criticism on state and federal levels and ultimately Anthem decided to postpone its increases for two months.

“The five biggest companies in 2009 alone, at a time where we saw a huge economic downturn, where the GDP posted a minus percent increase, we had insurers, these top five insurers, who had $12.2 billion in profit” Sebelius said Thursday. She added “these profits are wildly excessive.”

Wellpoint officials held their own press conference Thursday where they continued to defend the increases, blaming the recession for a shrinking pool of customers who are older and sicker.

“We understand this is a hardship,” said Brian Sassi, president and CEO of WellPoint’s consumer-business unit. “This is not something we voluntarily choose to do.”

The HHS report said Anthem Blue Cross of California’s increases were in step with increases sought by insurers in other states. In Connecticut, Anthem requested a 24 percent increase last year, which was rejected by the state. In Maine this year, Anthem is requesting a 23 percent increase. That comes after its 18.5 percent hike was thrown out last year. Michigan topped the charts with a request for a 56 percent increase from Blue Cross Blue Shield for individual plans. It too was denied.

The report found that in Washington state, rates spiked 40 percent until regulators cracked down.

Also during the Thursday press conference, Sebelius responded to questions from reporters about the state of Democrats’ health care reform legislation. She said that she expects a single health care reform bill to be posted online before the summit next week that combines some of the best ideas of the House and Senate bills, however, she did not provide any more specifics.