The Obama administration threw another jab at the country's largest health insurer on Wednesday by asking state regulators to double-check WellPoint Inc. premium hikes after an audit found problems with proposed California increases.
The Obama administration threw another jab at the country’s largest health insurer on Wednesday by asking state regulators to double-check WellPoint Inc. premium hikes after an audit found problems with proposed California increases.
U.S. Secretary of Health and Human Services Kathleen Sebelius said in a letter to state governors and insurance commissioners they should re-examine any WellPoint rate increases in their states “to the extent you have authority to do so.”
“Even small errors can mean unaffordable premiums for policyholders,” said the letter, which was released by the secretary’s office Wednesday.
An HHS statement that accompanied the letter said auditors found “unreasonable assumptions” behind plans by WellPoint’s California subsidiary, Anthem Blue Cross, to raise individual insurance rates as much as 39 percent for some customers.
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Sebelius also asked regulators to seek authority, if they don’t already have it, to review rates increases before they take effect.
Last week, Anthem Blue Cross withdrew plans for the increases, which averaged about 25 percent, after California Insurance Commissioner Steve Poizner said an independent audit found flawed data. Poizner said the application for increases contained mathematical errors and double counting of data.
WellPoint, based in Indianapolis, said in an e-mail Wednesday it believed the miscalculation was unique to its California individual insurance business, and its rates comply with state statutes and regulations.
Spokeswoman Kristin Binns said many of the insurer’s rates have already undergone layers of review that include public hearings and examination by a third party.
WellPoint, the largest health insurer based on enrollment, runs Blue Cross Blue Shield plans in 14 states and Unicare plans in several others.
Its proposed California rate increases first drew criticism from President Obama and Sebelius in February. They used the hikes to illustrate the need for a health care reform bill that aims to help cover millions of uninsured people.
Many analysts have said WellPoint helped re-energize the push for reform after a Republican victory in the race for a Massachusetts senate seat in January cast doubt on the bill’s future. Congress passed the reform bill in March.
WellPoint has said it was forced to raise rates in part because of the rising cost of care. The insurer also has said it plans to file a new application for a rate increase in the state.
The company has been “politically tone deaf,” said Robert Laszewski, a health care consultant and former insurance executive.
“If you’re under enormous scrutiny for something like this, the basic Management 101 thing to do would have been to go back to your actuaries and say, ‘You better be sure this was right,'” he said.
Laszewski, a critic of the overhaul, said he thought the Sebelius letter was “70 percent political and 30 percent warranted.”
He noted that the Obama administration and Democrats have made the insurance industry their “whipping boy” to sell reform, but polls show that some people still have doubts about it.
“There are a lot of people that don’t think that bill should have been passed, so the Obama administration in the runup to November elections continues to need to sell the bill hard,” he said.
WellPoint shares slipped 7 cents to close at $52.53 Wednesday, while stock prices for other large insurers like UnitedHealth Group Inc. and Aetna Inc. rose more than 1 percent.