Justification of Individual Health Insurance Rate Increases

Lately we’ve been covering health care and health insurance reform here on the Weekly News Roundup, but this week we’re going to take a different track, which might yet show another argument for reform in a roundabout way. An article from the Los Angeles times entitled, “Anthem’s parent company defends health insurance rate hike” is the focus of our roundup today. The uproar over Wellpoint and Anthem Blue Cross of California raising their rates by up to thirty-nine percent for their individual health insurance premiums starting March 1st of this year has been dwarfing news of health care reform lately, so let’s take a look.

The news of this rate hike broke a couple of weeks ago, and steadily more and more criticism has been laid against Wellpoint and Anthem Blue Cross of California for their rate hike, which ranges from 25% to 39%, depending on factors such as age, pre-existing conditions and so on. In a recent letter to the Obama administration, Wellpoint placed the blame for the increases on soaring health care expenses, an “exodus of healthy customers” from its ranks as well as a loss of revenue from its Anthem Blue Cross of California division in general. Their letter also tried to soften the blow, saying most people would “only” see a 25% increase in their premiums. In this economy, 25% can be a lot.

This letter, and the news of the rate hikes in general, has drawn in criticism from all over the government, including President Obama on down. Health and Human Services Secretary Kathleen Sebelius predicted that the rate hike would force people to either scale back their premiums or cut out their insurance coverage entirely. She continued, “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. 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 condemned the “greed” and “reckless decisions” of Anthem without citing the company by name. President Obama cited these specific increases as another reason for Congress to pass comprehensive health care and health insurance reform.

Which brings us back to the reform topic. There are many who cite this specific incident as a great reason for why this country needs health care and health insurance reform and the nationalization of the health care and health insurance systems. Under a government run system, private companies wouldn’t have this kind of wholesale power over their customers. On the other side of the coin, many people argue that putting health care and health insurance in the hands of the government would make things worse. As a counterpoint, people can point to Medicare and show how well that works.

However, in looking at an example like Wellcare’s here, it’s easy to see how much more appealing a centralized health care system might be.