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Future Shock, California Style

Obama slams Anthem Blue Cross health insurance rate hikes.

A major goal of the Obama administration’s health care reform initiative is to mandate that all Americans carry health insurance or pay a penalty, so that the burden of caring for the sick can be shouldered by a larger proportion of the healthy.

Anthem: problem is that healthy people don’t enroll

“Our decision to agree to postpone the rate adjustment does not change the underlying issue,” Anthem Blue Cross of California said in its statement. “We are experiencing a higher proportion of healthy individuals choosing not to enroll, leaving an insured pool that utilizes significantly more services.”

The statement also suggested that without aggressive steps to control costs, health care reform won’t solve the financial issues faced by insurers. “We need to refocus the health care reform debate toward steps that will improve quality and control the underlying medical costs, which is driving the high cost of coverage,” it said.

WellPoint, Anthem’s corporate parent, has lobbied actively against health care reform.

Plans passed by both the House and Senate would require everyone to have health insurance in order to increase the ratio of healthy people to unhealthy people among those who are insured. Health insurance marketplaces, known as exchanges, would force insurers to compete for customers with more transparent prices and policies. In addition, insurers would no longer be able to drop customers because of their medical conditions.

California insurance commissioner Steve Poizner, who is also a GOP gubernatorial candidate this year, told reporters in a conference call that his agency had been seeking more information from Anthem since November about the proposed hikes, and wants his auditors to confirm that the new rates comply with a 2006 state law that mandates insurers spend 70 percent of all premium dollars on medical care.

“Medical cost inflation in California is in the 10 to 15 percent range, so I have a healthy skepticism how they can get to 39 percent” and comply with the law, Poizner said. If the auditors find that the rate hikes exceed what is permissible, Poizner can demand that Anthem reduce rates or take away its license to do business in the state.

If you would like to discuss health care reform in AARP’s Online Community, please join the group Health Action Now Mythbusters.

Michael Zielenziger writes about business and the economy. He lives in the San Francisco Bay area.


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