If any group can claim responsibility for breaking the logjam on health reform, you might say it was WellPoint. Just as it seemed that health reform was headed for the graveyard, WellPoint’s Anthem subsidiary in California sent a Dear Policyholder letter to customers telling them to prepare for rate hikes that in some cases hit 35 percent. California insurance regulators said “Hey, what gives,” but claimed they had no power to stop the increases. HHS Secretary Kathleen Sebelius shot off a letter saying she was “very disturbed to learn through media accounts” about the raises. Former labor secretary Robert Reich said, by God, he was going to drop his Anthem policy, “if that made any difference.” And there were press stories aplenty.
Apparently all the fuss did have an impact on the company, which, on Friday, pulled back from its May 1 deadline for implementing the increases. Anthem’s PR shop must have counseled the insurer to take the high road and refile for smaller increases. California insurance commissioner Steve Poizner, who is campaigning for governor, announced that Anthem’s current rate application was “just flawed,” because of double counting of data and math errors. Uh oh! Soon the AP had spread the news across the land. The villain had screwed up. Good copy, indeed.
WellPoint, which sprang years ago from a nonprofit, run-of-the-mill Blue Cross organization, began its rise to ignominy last fall when Anthem dared challenge Mila Kofman, the insurance superintendent in Maine, who reduced their requested rate increase for policies sold in the individual market. Anthem had asked for an 18.5 percent increase and a three percent profit margin. Kofman said no, and reduced the increase to about 11 percent, calling the request “excessive and unfairly discriminatory.” She allowed the company no profit margin.
The carrier challenged Kofman’s decision in court, and lost. A week ago, the chief justice of the Maine superior court ruled that the rate allowed was not “inadequate,” as Anthem had argued. “The timing seems like another piece of bad luck for Anthem,” observed one state regulator. “They chose to appeal and got a bad decision in the midst of this rate controversy.” This year, Anthem is asking for increases averaging 22.9 percent on its individual market policies, and Kofman will soon rule on that request.
When we first reported on the Maine mess last fall, we encouraged the press to stay on top of the case, and we’re pleased to see that at least some of them have. At lunch the other day, two health journalism students from the University of Coventry in England asked whether the press would continue to write about rate increases and insurance companies dropping sick people—something they told me is unheard of in their country. I reflected on their question. Who would have thought that such an arcane topic as insurance rate increases would have caught the media’s attention? The reason may have little to do with the people who must pay the increase (11 percent is still a substantial hike), and everything to do with WellPoint emerging as the health system’s chief villain. The press loves its villains—the bigger the better.
We hope the media continues to report on this stuff, and starts talking about how ordinary people will fare with the rate hikes, whatever they turn out to be. We also have a few suggestions that will add much needed story context:
• Avoid substituting the obvious in place of more complete analysis. In a story about Anthem withdrawing its California rate request, CNNMoney.com reported that “Critics say Anthem and other insurance companies want to raise rates to help boost profits.” Duh! Doesn’t every business entity want to do that? How is WellPoint different from Continuum Health Partners, which just asked Aetna for a 40 percent increase in provider rates, or a dentist whose prices for a teeth cleaning rose from $100 to $180 in a couple of years?
• Understand that in this system of commercial, for-profit insurance, the carriers will have the last word, despite all the huffing and puffing by politicos and advocacy groups like HCAN, which has called for a nationwide review of WellPoint’s rates. If they can’t get the increases they expect and say they need, they will compensate in other ways—by designing policies that cover very little, or shifting more cost to policyholders through sky-high deductibles. In Maine, some already reach $15,000. Those actions could hurt policyholders even more. Ultimately, they can stop selling policies in states with unfriendly rate regulation.
In his weekly roundup for Oppenheimer & Co., Carl McDonald speculated: “If WellPoint isn’t granted something close to the rate increase they are requesting, we wouldn’t be surprised to see the company exit the individual market in the state. Doing so would send a message to state regulators across the country that they can only go so far in limiting plan rate increases before plans are no longer willing to remain in the market.”
So goes Maine.