Main Street

Anthem: Increasing Profit, Not Preventing Loss

So, Anthem Blue Cross totally needed to raise rates on individual policy holders in California by up to 39%. They were losing money, people! (On the individual market in California, while making giant profits overall.) Just trying to staunch the bleeding! (They told us.)

Internal emails tell a different story. You might need to sit down before reading this, but: The rate increases were to increase profits, not minimize loss. Who could’ve guessed?

This came out yesterday at a hearing held by the House Energy and Commerce Health Subcommittee, where Representatives Waxman and Stupak read out some internal Anthem emails.

– “The average increase is 23 percent and is intended to return California to a target profits of 7 percent, versus 5 percent this year.” [WellPoint email, October 7, 2009]

– “We’re asking for premiums that would put us $40 million favorable…if we get the increases on time, we will see an opt gain upside of $30 million downgrades and rate cap.” [WellPoint email, November 2, 2009]

– “[W]e needed to reach agreement on filing strategy quickly — specifically in the area of do we file wth a cushion allowed for negotiations.” [WellPoint email, 10/24/2009]

Company-wide profits aren’t enough for them. Profits in California aren’t enough for them. No, every single area of business has to be profitable for them. What’s next? How far does it get subdivided? “Well, yes, we were making money on individual policyholders, but we weren’t making money on individual policyholders over 60, so we had to raise their rates by 73%”?

This is why there needs to be meaningful competition and meaningful cost controls. This is why a public insurance option is the best choice – because when individual policy holders got their letters announcing a 39% increase, they’d have somewhere to go. And don’t you think maybe that would make Anthem rethink whether to send the letters to begin with?

Tags: health care reform, insurance companies