Health Care For America Now

WellPoint, the mega-insurance-corporation that owns Anthem Blue Cross, decided to delay Anthem's widely reported rate increases in California, which were as high as 39% for some customers. This comes on the heels of the news that the insurance industry as a whole - and WellPoint in particular - posted record profits last year while simultaneously cutting millions of customers from their rolls.

The delay in the rate increases may end up being just that - a delay:

State Insurance Commissioner Steve Poizner said Saturday that he secured an agreement with Anthem to postpone for at least two months the increases that had been set to take effect March 1 for many of the estimated 800,000 policyholders.

The delay, he said, would give state regulators time to have newly hired outside health-insurance actuarial experts analyze Anthem's rates to make sure they don't violate California law.

But it could give WellPoint time to think about whether the rate increase is worth the tradeoff. Since the news broke, WellPoint stock has fallen 3.8%, while the S&P was up 1% in the same time period.

Of course, you can't always rely on a big news story to delay or perhaps reverse rate increases like this. Insurance companies have been increasing customer rates by double digits for years now. Anthem's rate increase wasn't noteworthy for the breadth and depth of the changes, only in the attention it got from the media, state insurance commissioners, Members of Congress, and the Obama administration. Not every rate increase will get this attention. As Ezra Klein points out, that's why we need health reform:

The insured can't depend on someone in the White House's communications shop noticing when an insurer tries to screw its customers. What we need is an actual policy standing between the insured and the grim incentives of their insurers. That's what health-care reform is meant to be, and the Anthem saga is a good example of how it would work.

Ezra goes on to explain what's in the Senate bill that would help stop these things from happening. First, insurers would have to publicly justify the rate increases to the people who run the Exchange. If they couldn't justify the increase, or the administrators of the Exchange didn't accept the justification, the entire company could be barred from offering insurance through the Exchange. Second, the bill would bar insurers from denying care based on pre-existing conditions and the like, changing the incentives for insurers so that they're no longer weighted towards raising rates and dropping customers.

Of course, there's much more to the Senate bill that would help this situation, and even more in the House bill.

For example, the Senate bill would require that insurance companies spend 80% of customer premiums on health care instead of profits and "administrative costs" for individual plans and 85% for large group plans. The House bill mandates 85% across the board. For plans like Anthem's - individual insurance policies that are most subject to the gouging of insurance companies and typically have loss ratios that are much lower - that means much more premium dollars will be spent on care.

In the House bill, the Exchange would be run nationally, which means the administrator would have more power to keep insurance companies in check and customers wouldn't have to rely on their state's insurance commissioner or Exchange administrator - very good in some states, very corrupt in others - to protect them from rate increases.

And the House bill has a public health insurance option as one choice in the Exchange. Via competition, it would act to keep rates down among all plans.

But for now, in a world without health reform, none of these things are happening. In fact, WellPoint's Board of Directors just cashed out just ahead of the company's stock price-killing rate increases:

Three WellPoint board members have collected a combined $625,517 in gains from stock options in the Indianapolis-based health insurance giant as the company has faced national media scrutiny and barbs from the Obama administration over premium increases.

…

With $3.02 million in total insider sales Feb. 1-9, this month already ranks as the fourth-highest tally of insider selling at WellPoint since the start of 2009, according to insider trading data tracked by Thomson Financial. December was the top month during that period, with WellPoint officers and directors selling a combined $12 million.

In a world without reform, WellPoint's customers - working families, sick people struggling to find insurance - face 39% rate increases while the Board of Directors, many of whom are former politicians or other well-connected people, makes hundreds of thousands just days before their stock price takes a hit.

All the more reason we must get health reform done and get it done right.