Coming Down on Anthem Blue Cross in California

Two LA Times stories investigate the financing and regulatory malfeasance of Anthem and parent Wellpoint

February 24, 2010 -- The recent focus on Anthem Blue Cross in California for excessive rate increases mirrors much of our reporting at The Lund Report about premium increases in Oregon.

Today, WellPoint CEO Angela Braly faced questioning by Congress. And yesterday an LA Times article focused attention on Anthem's financial arrangements with its Wall Street masters. Another Times article documents alleged regulatory violations by California's largest insurer.

From the LA Times yesterday:

Health insurance giant Anthem Blue Cross said it was raising rates on thousands of individual policyholders in California because the cost of their medical care exceeded the premiums they paid last year.

At the same time, other parts of Anthem reaped a profit. A Times analysis of the company's regulatory filings shows that $525 million in Anthem's earnings in 2009 was shipped to its corporate parent WellPoint Inc. The analysis' findings were not disputed by Anthem.

Anthem Blue Cross has been so profitable that, since WellPoint acquired it in 2004, it has contributed more than $4.2 billion to the parent company's bottom line.

Critics say some of those gains should have been kept in California and used to cover the losses on Anthem's individual policies. Instead, the company turned to individual policyholders to make up the losses with rate increases of up to 39%. Read More >>

And also yesterday another LA Times piece on regulatory violations by Anthem:

California's largest for-profit health insurer violated state law more than 700 times over a three-year period by failing to pay medical claims on time and misrepresenting policy provisions to customers, the state's insurance commissioner said Monday.

Anthem Blue Cross of Woodland Hills could face fines of up to $7 million stemming from the alleged violations from 2006 to 2009. Commissioner Steve Poizner said the insurer repeatedly failed to respond to state regulators in a "reasonable time" as they investigated complaints over the last year.

"We believe there is evidence to suggest there are serious issues with how Anthem Blue Cross pays claims," Poizner said at a Sacramento news conference. "Most disturbing to us is that they don't even respond" to the Department of Insurance "in a timely way." Read More >>



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So why did they didn't foresee this problem when they founded Anthem Blue Cross? They should have been ready for this.