Congress demands explanation of California Blue Cross' rate increases when profits are up

by L.A.S.

California's Blue Cross operations must be doing great. They experienced record profits in a troubled economy in 2009, yet have raised rates as much as 39 percent. The Los Angeles Times reported on Jan. 28 of this year that Wellpoint's profits soared eightfold.

This news was shortly followed by an article on Feb. 4 in the same paper that Anthem Blue Cross was raising rates on individual health policies in California, in some cases by as much as 39 percent. The same paper reported on Feb. 10 that Congress was opening a probe into Anthem Blue Cross; the Department of Health and Human Services (HHS) was also interested in the case.

Wellpoint is the corporate parent of Anthem Blue Cross; its profits soared to 4.7 billion dollars last year, a record for them and extremely impressive in the current economic climate. There might be a link behind the improved profits and the fact that Blue Cross dumped 1.4 million policyholders last year, who were no doubt the most-expensive-to-insure and the least-desirable-actuarially.

Besides these U.S. government departments, interest in this development has also been expressed by public-interest or progressive social/political organizations such as MoveOn. You might like to visit the latter's website at MoveOn dot org where they are gathering signatures for an electronic petition demanding an explanation and rollback of the Blue Cross rate increases.

The need for prompt intervention in this corporate abuse is needed because not only is Blue Cross refusing to explain the rate increase, it is threatening to deliver further rate increases without warning. Even though many states require stringent reporting and forecasting of claims and payouts, there is no national regulation of rate increases. By that I mean, no limits on how much they can raise rates, nor on how often they can raise rates. This is the next best thing to having a license to print money.

So far, Blue Cross is stonewalling on an explanation and will continue to do so until this issue becomes a public-relations problem. That is why I urge you to spread the news of this case and to sign petitions, write letters to the editors, and blog AND do whatever else you can think of to be a thorn in Blue Cross' butt.

UPDATE: As of Monday, Feb. 15, Blue Cross announced that they will delay the rate increases for two months. This is evidence that public pressure has made them uncomfortable, but a short delay is not enough. Keep applying the pressure and we believe that they will be forced to abandon the effort.