Sebelius Calls on Anthem Blue Cross to Justify 39% Premium Increase

I am not one to be a mouthpiece for the government but this caught my eye and seemed appropriate to pass on. I would be glad to blog about Anthem’s response to this and do not profess that I have dug through the facts to know if HHS’s figures are accurate though I would imagine they came from publicly available materials from Wellpoint.

Department of Health and Human Services Secretary Kathleen Sebelius today sent a letter to Anthem Blue Cross and called on the company to publicly justify its decision to raise premiums for its California customers. Here follows the letter:

February 8, 2010

Leslie Margolin
President, Anthem Blue Cross
Delivered Via Fax

Dear Ms. Margolin,

One of the biggest pressures facing families, businesses and governments at every level are skyrocketing health insurance costs. With so many families already affected by rising costs, I was very disturbed to learn through media accounts that Anthem Blue Cross plans to raise premiums for its California customers by as much as 39 percent. These extraordinary increases are up to 15 times faster than inflation and threaten to make health care unaffordable for hundreds of thousands of Californians, many of whom are already struggling to make ends meet in a difficult economy.

Your company’s strong financial position makes these rate increases even more difficult to understand. As you know, your parent company, WellPoint Incorporated, has seen its profits soar, earning $2.7 billion in the last quarter of 2009 alone.

I believe Anthem Blue Cross has a responsibility to provide a detailed justification for these rate increases to the public. Additionally, you should make public information on the percent of your individual market premiums that is used for medical care versus the percent that is used for administrative costs. Policy holders in the individual market deserve to know if their premium increases would be invested in better medical care or insurance company overhead costs like salaries, profits, and advertising. I am aware that the State of California is investigating this matter, and urge Anthem Blue Cross to cooperate fully. In the meantime, I will be closely monitoring the situation.

At a time when health care costs are a critical threat to families as well as the nation’s economy, I hope you appreciate the urgent nature of this request. I look forward to your prompt reply.

Kathleen Sebelius

Secretary of Health and Human Services

Note: All HHS press releases, fact sheets and other press materials are available at