U.S. Department of Health and Human Services Secretary Kathleen Sebelius is objecting to an insurer's move to increase the cost of individual health insurance policies sold in California by 39%.
Anthem Blue Cross of California, a unit of WellPoint Inc., Indianapolis, has announced that it will put the rate increases into effect March 1.
California Insurance Commissioner Steve Poizner called Monday for Anthem to wait until May 1 to apply the rate hike, to give the department's independent actuary time to complete a review of the increases.
"The premium increases Anthem proposes for critically needed individual health insurance could have a devastating financial impact on hundreds of thousands of its policyholders in California," Poizner has written in a letter to WellPoint President Angela Braly and to WellPoint Chairman Larry Glasscock, who will be stepping down from the post of chairman March 1.
"The department has received numerous complaints from irate Californians describing how Anthem's proposed rate increases would cripple them financially," Poizner writes.
Under California law, Anthem must pay at least 70 cents in benefits for every premium dollar it collects, Poizner writes.
Poizner says he will take legal action to stop the proposed increases if the independent actuary shows they are not justified.
Sebelius, a former Kansas insurance commissioner and former president of the National Association of Insurance Commissioners, Kansas City, Mo., has written to ask Leslie Margolin, president of Anthem Blue Cross of California, to explain why the company wants such a big rate hike.
The proposed premium hike "reminds us that too many Americans can be left with unaffordable insurance each time the rates or rules change in the private market," Sebelius writes. "It's clear that we need health insurance reform that will give American families the secure, affordable coverage they need."
Anthem's parent, WellPoint, reported $2.7 billion in earnings for the fourth quarter of 2009, Sebelius notes.
