We were pleased to see HHS Secretary Kathleen Sebelius discover that high rate increases proposed by Anthem Blue Cross were not just a California phenom. A week ago Campaign Desk suggested that Sebelius, once the Kansas insurance commissioner, might be interested in the tough scrutiny of Anthem from insurance commissioners in Maine and Connecticut, states that regulate health insurance premium rates, unlike California.
Well, what do you know? Sebelius issued a report a few days ago saying that Anthem in California “isn’t alone in insisting on premium hikes.”
Sebelius’s short report noted the rate increase in Connecticut that had been reduced by an administrative hearing officer, as well as the requested increase in Maine reduced last year by insurance superintendent Mila Kofman, who called the increase “excessive and unfairly discriminatory.” It turns out that in January Anthem came back to Maine for more, this time asking for a 23 percent increase.
She briefly mentioned rate hikes in other states—Oregon, Rhode Island, Washington, and Michigan. The non-profit Blue Cross Blue Shield of Michigan had asked regulators for a 56 percent rate increase in 2009.
Michigan is an interesting case, and one that reporters delving into the topic might want to look at for historical context. In particular, when it comes to covering the behemoth Blues, they might take a few lessons from Patricia Anstett, medical writer at the Detroit Free Press, who has ably kept on top of the Blue Cross story.
According to Consumers Union, rates for individual policies increased 23 percent in 2003, 15 percent in 2005, and 15 percent in 2006. The next year the carrier wanted rate increases averaging 24.3 percent. That was reduced to an increase of about 15 percent. In 2009, Blue Cross wanted the 56 percent average increase that Sebelius noted in her report. However, after pressure from the state’s attorney general, the insurer got only a 22 percent hike—a point the Sebelius report did not note.
That omission prompted the CEO of Michigan Blue Cross to tell Sebelius that the reference to his company’s rate increase failed to present the complete story and acknowledge its losses in the individual market. In Michigan, Blue Cross is the carrier of last resort and must issue insurance to all residents regardless of their health conditions. So is Michigan a harbinger of what can happen to rates when health reform requires carriers to take everyone—even those at death’s door? It’s been easy during the whole debate to whip up outrage against the insurers for denying coverage to sick people. But there’s been little discussion of what may happen to premiums when sick people are brought into the mix and healthy people who can’t afford the price exit, pay token penalties, and go without coverage. In their justification for higher premiums, insurers claim this is what happens. This, it seems to me, is the real take-away from all the Blue Cross rate increases.
But there’s another issue at stake, and that’s the right of the public and other state officials to challenge what they consider to be exorbitant rate increases. According to Chuck Bell of Consumers Union, the Michigan carrier aggressively promoted a package of insurance market reforms that could have eliminated the ability of policyholders and the state AG to challenge rate increases at public hearings. In the end, a state house and senate conference committee was unable to agree on a bill. Says Bell: “Blue Cross fought very hard through 2007 and 2008 to eliminate the right of consumers and the Attorney General to request rate hearings for individual market and Medigap increases.”
Since October we have been urging the media to examine the rate increases requested by Anthem Blue Cross, and to follow the lawsuit in Maine which will go to a hearing next month. We believed the company’s fight with Maine’s insurance superintendent was just the tip of the iceberg. But it wasn’t until Anthem began sending notices to policyholders in California, and the president and his secretary decided to publicly chastise the company, that the press began to pay attention—once again playing follow-the-newsmaker leader.
This story needs constant updating and watching, and raises questions about insurance regulation and the power of the big companies to fight it. Insurance regulation, remember, is what the president has said health reform is all about. Sometimes the press needs to take the lead, and this is one of those times.