WellPoint, one of the largest
health insurers in the US, is under scrutiny following a request
from Department of Health and Human Services secretary Kathleen
Sebelius to governors and state insurance commissioners to
re-examine recent insurance rate increases.
Her call follows an investigation
by the California Department of Insurance (CDI) carried out at her
request which found a proposed 39% premium increase in California
by WellPoint’s Anthem Blue Cross unit was based on unreasonably
high assumptions about the rate of medical cost increases.
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The report, undertaken by Axene
Health Partners (AHP), found numerous errors in the methodology
used by Anthem to project total lifetime loss ratios. Errors
identified were errors of calculation and not differences in
actuarial opinion, noted AHP.
Following release of AHP’s
findings, Anthem withdrew plans for the premium increase, which was
to be implemented on 1 May.
Originally, the increase was due to
take effect on 1 March but was postponed because of strong
objections.
Notably, Anthem’s proposed increase
was highlighted by President Obama in the run-up to the passage of
the health care reform Patient Protection and Affordable Care Act
which he signed into law on 23 March.
Hitting-out at health insurers in general, Sebelius said in a
statement: “For too long in this country, Americans have been at
the mercy of insurance companies, and have ended up paying a steep
price. Using faulty assumptions and loopholes, insurers have tried
to game the system and consumers have ended up with one bad deal
after another.”
