CEO of Wellpoint confirms premiums rising due to lack of mandate

WASHINGTON (MarketWatch) -- Rising health-care costs and people opting out of the health-care system are to blame for insurers like WellPoint Inc. hiking their rates in California, the company's chief executive told lawmakers Wednesday at a hearing probing big premium increases by WellPoint subsidiary Anthem Blue Cross.

"While we believe that an increase in our rates is unfortunate, it is necessary," WellPoint's Chief Executive Angela Braly told members of a House Energy and Commerce subcommittee.

Certain Anthem Blue Cross customers in California are facing an average 25% increase in rates. President Barack Obama and congressional Democrats have taken aim at the company for planned price hikes of as much as 39% more. WellPoint agreed to postpone some of the planned March 1 increases for two months as a result of the controversy.

"The increases we are seeing in California are due to factors that we have been sounding the alarm about for years," said Braly in prepared testimony. "The rise in health-care costs and healthy people opting out of the system when other issues arise -- such as the tough economic times we are experiencing today.

"These factors led to the rate increases you have seen from our company and others in California," Braly told lawmakers. Read Braly's testimony.

Braly met with a largely hostile reception from a number of Democratic members of the subcommittee on Oversight and Investigations, most of whom challenged the company's expenditures for such things as executive retreats.

U.S. Rep. Peter Welch, D-Vt., pointed to WellPoint's rising profits, which nearly doubled in 2009.

"That's a business model that's working for you, the insurer," Welch said, but was hurting policyholders.

As Braly and other WellPoint executives appeared before Congress, the Center for American Progress Action Fund released a report that said WellPoint was imposing double-digit increases in at least 11 states.

The report said WellPoint plans to impose increases of 12% to 24.5% in a number of states, including Colorado, Connecticut, Georgia, Indiana, Kentucky, Maine, Nevada, New Hampshire, New York, Ohio, Virginia and Wisconsin.

And Braly's testimony came a day before Obama and bipartisan members of Congress are scheduled to meet for a summit on health care at the White House. The meeting is Obama's attempt to resuscitate the stalled overhaul of the health-care industry, which has been languishing in Congress since Democrats lost their supermajority in the Senate.

Obama's latest proposal would set up health-insurance "exchanges" that his administration says will help control costs, as well as give the federal government new authority to deny big rate hikes. Read more about Obama's plan.

Republicans, meanwhile, are stressing medical malpractice reform and allowing consumers to buy insurance across state lines. Read more about Republicans' plans.

But Braly said that the "leading" proposals now under discussion in Washington don't do enough to control costs or insure more Americans.

Lawmakers including Rep. Henry Waxman, a California Democrat, said rate increases like those planned by Anthem Blue Cross underscored the need to overhaul the nation's health-care system.

"What this hearing will show is that the current system is absolutely unsustainable," said Waxman, the committee's chairman. "If we fail to pass health reform, insurance rates will skyrocket and health insurance will become so expensive only the most healthy and the most wealthy will be able to afford coverage."

But Democrats and the White House are still having a hard time getting Republicans on board, just a day before the summit.

"The American people simply do not want the Obama plan," said Rep. Phil Gingrey, R-Ga

http://www.marketwatch.com/story/wellpoint-ceo-defends-insurance-rate-hikes-2010-02-24

Argued on another board about this for hours today. The insurance company is confirming what we already know, healthy people voluntarily forgoing coverage causes rate increases for everyone else. Without a mandate the uninsured will continue to use the ER and not pay their bills. The GOP will continue to suggest that forcing people to buy coverage is violating their freedom. But what happens when these people have a need for emergency services and cannot pay for it?

As the number of uninsured rises, there is a corresponding increase in uncompensated care costs, which include costs incurred by hospitals and physicians for the charity care they provide to the uninsured as well as bad debt (for example, unpaid bills). Both the Federal government and state governments use tax revenues to pay health care providers for a portion of these costs through Disproportionate Share Hospital (DSH) payments, grants to Community Health Centers, and other mechanisms. In 2008, total government spending to reimburse uncompensated care costs incurred by medical providers was approximately $42.9 billion. In the absence of reform to slow the real growth rate of health spending and a subsequent rise in the uninsured, we project that the real annual tax burden of uncompensated care for an average family of four will rise from $627 in 2008 to $1,652 (in 2008 dollars) by 2030.

 

I just don't get it. They seem to feel it's a freedom to be uninsured but then complain about higher taxes and higher premiums both of which are caused by the uninsured using services and not paying for them.