California’s Anthem Blue Cross, one of the largest health insurers in that state, announced a 39% increase in premiums and signaled that it will likely allow rate increases to occur more than once a year. Appropriately enough, this has caused an uproar in California that will certainly be felt in Washington.

Anthem mainly provides health insurance for people who are unable to get it through their employer. This means that the full burden of the rate increase is paid for by the individual.  Families already stretched thin will be forced to drop their health care coverage (and end up in Emergency Rooms when there’s a problem).

I checked the rates for family coverage using the following scenario: Male 39 yo, Female 37 with one 9 year old boy and 7 year old girl. The most expensive monthly rate was $299 BUT there was a $10,000 annual deductible plus an annual out-of-pocket expense not to exceed an additional $5,000. On some plans, the deductible is waived for certain services such as Well-Child and adult office visits. Ummmm, it’s not clear to me why someone would opt to pay an additional $116/month more for such poor coverage anyway. A $10,000 annual family deductible amounts to $833/month in medical expenses that would be incurred by the family for a year before their health care expenses would be paid for. Essentially, this policy is for catastrophic coverage only.

Whether or not the coverage provided by Anthem is adequate, this rate increase is being reviewed by the State Department of Insurance to see if it is justified by law. The president of Anthem, Leslie Margolin, argues that the anger directed against Anthem is misplaced. “This debate and this inquiry cannot and should not be just about the insurance industry or the delivery system or regulators or legislators or customers or brokers,” Margolin said.

“We have wasted precious time and precious resources doing battle with each other,” she added. “We must come together collaboratively and strategically to address the distressing symptoms of our troubled system — rising premiums, for example — and to address the fundamental underlying causes of our collective failure.”

The rate hikes are on hold until an outside actuary board can verify that Anthem spends 70% of its premiums on medical expenses, as mandated by California law. Anthem officials are confident that the rate increase will go ahead. Anthem officials say that their profit margin is on par with other health insurers and amounts to no more than 5%.

Sounds reasonable until it was declared during the Senate hearings 2/24/10 that Anthem made over $2.5 billion in profit last year (that excludes the profit it made on the sale of one of its businesses for another $2+ billion dollars). Anthem’s CEO testified yesterday that she made about $1.7 million dollars in salary, over $8 million in stock-options and another $74,000+ in bonus incentive pay last year.

By the way, Anthem last year (August 8, 2009) blasted the proposed health care reform bill and urged customers to help fight the bill. Clearly,  they are not urging customers to fight against this rate increase but while they continue to make profits, customers are forced to pay for it.

Regardless of whether Anthem is making excessive profits (it claims otherwise but you decide) the cost of health care is breaking employers and individuals alike. It’s time for a single-payer system.

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