Sebelius demands Anthem explain its 'extraordinary' premium hikes

U.S. Department of Health and Human Services (HHS) Secretary Kathleen Sebelius wants Anthem Blue Cross to publicly explain why the insurer plans to raise premiums by up to 39 percent for its California members.

"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," says Sebelius.

The rate changes are especially unpalatable in light of the company's financial position. WellPoint Inc., the Indianapolis-based parent of Anthem Blue Cross, posted $2.7 billion in net income for fourth-quarter 2009 and $4.7 billion for the full year.

In addition to providing a "detailed justification" for these rate increases, Sebelius wants Anthem Blue Cross to publicly release information on the percent of individual market premiums used for medical care vs. the percent used for administrative costs.

Sebelius' move to rake Anthem Blue Cross over the coals comes on the heels of a Los Angeles Times story that California's largest for-profit insurer would raise rates for individual policyholders by 30 to 39 percent effective March 1. Under the rate hikes, one couple's annual bill will increase from $20,184 to $27,336. The state is investigating the premium increases.

For more information
   - read Sebelius' media statement
   - read about WellPoint's 2009 financials
   - read the Los Angeles Times article about Anthem Blue Cross' plan