Take a hike, rate hikes!

Last week, Anthem Blue Cross indicated that it would raise premiums for its California customers by as much as 39 percent. U.S. Department of Health and Human Services (HHS) Secretary Kathleen Sebelius sent a letter to Anthem Blue Cross and called on the company to publicly justify its decision, noting that the parent company of Anthem Blue Cross, WellPoint Incorporated, earned $2.7 billion in the last quarter of 2009.

This week, Anthem Blue Cross announced it is delaying raising rates. “While a two month delay offers some temporary relief, what California families need is long-term health insurance security, so that they don’t face sharply higher prices or fewer benefits. This rate increase underscores the urgency of passing real health insurance reform,” Secretary Sebelius said in a statement responding to the announcement.

Review of premium increases. The House-passed bill (H.R. 3962) contains a provision that would address this situation. The name of this provision (and I am not making this up) is “Sunshine on price gouging by health insurance issuers.”

Act Section 104 of the bill outlines a plan for monitoring increases in health insurance premiums. The provision calls upon the HHS Secretary, in conjunction with the states, to establish an annual review process that would require insurers to submit a justification for any premium increases prior to implementation. Insurers also would be required to “prominently” post information regarding premium increases on their websites.

The provision also provides that the Secretary will establish a program of grants available to the states to assist them with carrying out the review process. Currently, review of premium increases can be mandated by state law. About 25 states give their insurance departments the authority to approve premium rates for all individual health insurance plans prior to the rates going into effect.