Sebelius: States Should Check WellPoint’s Math On Rate Hikes

Kathleen Sebelius, secretary of the Department of Health and Human Services, said states should investigate if WellPoint Inc. made math errors in how it justified rate hikes this year, The Wall Street Journal reports. "In a letter being sent to state insurance commissioners and governors late Tuesday, Health and Human Services Secretary Kathleen Sebelius calls for a national inquiry into the data underpinning rising health-insurance costs. Ms. Sebelius is seizing on WellPoint's decision last week to withdraw a request for up to a 39% price increases on individual plans in California after an actuary hired by the state found several mistakes in the filing." California's Department of Insurance found mathematical mistakes in WellPoint's rate hikes such as "overestimating future medical costs and double-counting the effect of its policyholders aging, according to insurance commissioner Steve Poizner, a Republican candidate for governor." The Sebelius letter urges states to tighten their review processes(Johnson, 5/5).

The Associated Press: "WellPoint, based in Indianapolis, said in an e-mail Wednesday it believed the miscalculation was unique to its California individual insurance business. 'Further, we believe that our rates are in compliance with statutes and regulations in the states that we do business,' the statement said" (Murphy, 5/5).

Reuters: In the letter to state governors, which was released Wednesday, "Sebelius urged them to check WellPoint's accounting assumptions and ensure that state insurance offices have the power to review and approve any insurance rate increases. ... 'I urge that, to the extent you have authority to do so, you re-examine any WellPoint rate increases in your state to determine whether any mistaken assumptions similar to those made in California were made in your state. ... Even small errors can mean unaffordable premiums for policyholders'" (Heavey, 5/5).

The Washington Post: "Sebelius said that insurers will be forced to compete more directly on price beginning in 2014, when new regulated marketplaces for the sale of insurance open for business." The Post reports that the letter Sebelius sent is part of the Obama Administration's ongoing efforts to tout the advances the health reform law has already made (Hilzenrath, 5/5).

Los Angeles Times: Consumer groups, too, are calling for reviews of Anthem Blue Cross (a business unit of WellPoint) in California. "The request by Health Access California follows Anthem's decision last week to withdraw rate hikes of as much as 39% for many of its 800,000 individual policyholders. ... The group wants rate increases scrutinized when they affect any of the more than 5 million Californians who have individual insurance policies or coverage purchased as part of a small employer group. Two state agencies regulate insurers and review filings for rate increases. Neither has authority to block the hikes unless insurers fail to meet minimum standards for healthcare spending" (Hefland, 5/4).

The Hartford Courant: In Connecticut, officials also are asking for an independent audit of WellPoint's rate hikes to examine their math. "Anthem Blue Cross and Blue Shield in Connecticut outraged some by requesting premium increases of 23 to 32 percent for people under 65 who bought individual plans. The Connecticut Insurance Department denied that request and approved rate hikes of 13 percent to 20 percent for Anthem's individual market plans. The individual market does not include people who have group-plan health insurance through their employer or some other organization" (Sturdevant, 5/5).