A War of Words: HHS vs. Wellpoint

Photo courtesy of Flickr Creative Commons user reway2007.

The Obama administration recently picked a high-profile fight with insurance giant Wellpoint, Inc. The issue: reports that one of its health plans was planning a major rate hike for some of its California customers.

The war of words began on Feb. 8 when Health and Human Services Secretary Kathleen Sebelius sent a letter to Anthem Blue Cross, a subsidiary of Wellpoint, saying that she was “very disturbed” to learn through news reports that the California plan was planning to raise premiums by as much as 39%. For more on that letter, check out an earlier post to this blog: https://egmnblog.wordpress.com/2010/02/08/hhs-takes-anthem-b-c-to-task/.

Wellpoint responded quickly to the criticism with a letter of its own. The company said that the rate hike simply reflected rising medical and pharmacy costs. Another factor impacting costs, Wellpoint said, is that the bad economy is driving healthy individuals to drop coverage, leaving a pool of sicker people in the individual market.

If the federal government wants to address the volatility in the individual insurance market, it should enact reforms that require individuals to purchase health coverage and find a way to reduce underlying medical costs, Wellpoint wrote in its letter to HHS.

But the sparring between Wellpoint and Democrats appears to be far from over. On Feb. 11, Ms. Sebelius issued another statement saying that Wellpoint is leaving consumers with “nothing but bad options: pay more for coverage, cut back on benefits or join the ranks of the uninsured.” Meanwhile, Democrats on the House Energy and Commerce Committee plan to investigate the rate hike in California and have scheduled a hearing for Feb. 24.

— Mary Ellen Schneider (on Twitter @MaryEllenNY)

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Filed under Health Policy, health reform, Practice Trends

2 responses to “A War of Words: HHS vs. Wellpoint

  1. tourist2010

    Wellpoint is in the same boat that most American businesses find themselves trying to bail out of.

    However, rather than to cut back on spending, lay off workers, cut back hours and take less in profits, Wellpoint finds itself in the enviable position of being able to send it’s custyomers a big whopping bill make up for lost revenues.
    Problem solved!

    What other businesses do you know of that can say:

    Business is bad. So to make up for lost revenue “we’ll just send a big bill to our current customers. After all…they have to pay it???

    It’s like our local water company. They were counting on revenue from new home hookups and when the new houses didn’t materialize they just sent us all a note saying our rates were going up 35% to make up for the shortfall.

    They didn’t say they were laying off workers or cutting back on expenses…just that they were going to increase our rates to make up for the bad economy.

  2. Pingback: Round 3: HHS Takes on Insurers « EGMN: Notes from the Road

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