As Washington again debated health reform last week, Coloradans enrolled in insurance giant WellPoint‘s Anthem individual group plan reeled from a 19.9 percent rate hike. Indianapolis-based WellPoint levied the double-digit increase here quietly in January, without a sound from Colorado lawmakers. A state insurance commissioner told the Independent he was unsurprised by the increase and “signed off” on it back in September.
A typical monthly insurance bill of roughly $300 on Anthem’s popular Blue Preferred individual-member plan comes in now at $360, a significant chunk higher in a recession for people working freelance or contract or part time jobs without access to lower-rate group plans.
Estimates put the number of insured Coloradans at roughly 4 million (roughly 750,000 Coloradans have no health insurance) and 6 percent of that population is insured on the individual market, a percentage that state Insurance Commissioner Marsy Morrison says is expanding every day. Even at 6 percent, though, an increase of $60 on each plan would reap an additional $14.4 million for individual-plan insurance providers. WellPoint, the largest health insurer in the nation and the most popular in Colorado on the individual market, will take the lion’s share of that cash.
Nineties deregulation
Although many states gave up the right to review rate hikes in the 1990s, Colorado retained its review authority. The procedure, however, seems perfunctory, at least as far as customers are concerned.
There is no review board for health insurance hikes, for example, as there is to examine proposed utility rate hikes. Health insurers simply submit requests to the state’s Department of Regulatory Agencies Division of Insurance.
Tom Abel, supervisor of the Rates and Forms section at the division, told the Colorado Independent that WellPoint sent in its request for the 19.9 rate increase in the fall, probably September — just after politically heated health reform town halls lit up the state for a month during the Congressional recess.
“An actuary looked over the paperwork and one of our analysts. Then I signed off on it,” Abel said of the WellPoint hike. He wasn’t surprised at the proposal.
“Large increases have been more common in the last few years,” he said.
Active responses
According to a report by the Center for American Progress, WellPoint has raised rates by double digits in at least eleven states this year, in some cases drawing regulatory action and legal fire.
In California, lawmakers outraged by a proposed 39.9 percent increase, subpoenaed financial records from WellPoint as well as Aetna and Cigna as part of an investigation into complaints that the insurers were denying 40 percent of patient claims.
At a hearing last Wednesday in Washington, California Congressman Henry Waxman charged WellPoint with cooking its books to justify the hikes. He said the company was doing business as usual, boosting profits but also looking to cover enormous executive bonus packages handed out last year.
WellPoint CEO Angela Braly answered that the rate increase was driven by soaring health care costs and the fact that healthy people paying into the system were dropping their coverage in the recession.
But Waxman cited documents that revealed WellPoint paid at least $1 million each to 39 executives in 2008 and spent $27 million over the last two years on executive getaways.
A 2009 New York Insurance Department report details the way insurers take advantage of deregulation there, fudging data to hide profits when filing rate increases with the state. Insurers, for example, routinely delay refunds, manipulate loss ratios, under-report excessive premium rates and price themselves out of unattractive policy markets.
As American Progress reports, some states, red and blue, have seen enough of WellPoint’s working under deregulation.
An Ohio law that went into effect at the first of the year sought to rein in WellPoint by limiting rate hikes, especially for people with chronic medical conditions. WellPoint’s Anthem Blue Cross Blue Shield as a result reduced rates by 44.2 percent on its main plans covering individuals, according to the Ohio Insurance Department.
Indiana lawmakers likewise introduced legislation that requires insurers to disclose information on rate hikes, including what percentage of policy payments go to administrative costs rather than actual benefits. Connecticut is also considering passing rate-increase review legislation.
Bills proposed this year in the Colorado legislature have focused on eliminating gender discrimination on the individual market and requiring that insurers like WellPoint include maternity coverage for that state’s growing number of women un-enrolled in group plans, who presently have almost no access to maternity and contraceptive coverage.
There are no insurance rate-hike review bills presently in the docket.
