WellPoint Inc., parent of Anthem Blue Cross of Connecticut, defended Wednesday swelling health insurance premiums for some individuals, citing higher costs from hospitals, doctors and drugmakers at a time when more customers are dumping coverage because of the tough economy, Reuters reports.
In testimony prepared for a U.S. congressional hearing on Wednesday, Chief Executive Officer Angela Braly said the 25 percent average increase for certain Anthem Blue Cross customers in California was “unfortunate” but “necessary,” Reuters said. She called on lawmakers to target other industries’ costs as they work to revamp the nation’s healthcare system.
“Raising our premiums was not something we wanted to do — but we believe this was the most prudent choice,” Braly said in her remarks. “All health insurers are in the same position, and even with this increase, our company’s premiums remain quite competitive.”
WellPoint, the nation’s largest health insurance company by membership, has drawn fire from congressional Democrats and the Obama administration for price hikes of as much as 39 percent set to take effect March 1. Although the premium increases were delayed by two months by the controversy, the U.S. House of Representatives Energy and Commerce Committee is probing the issue.
The hearing comes as Democrats try to revive their stalled legislation to overhaul the nation’s $2.5 trillion healthcare system. On Thursday, Democratic and Republican congressional leaders will meet with President Barack Obama in an attempt to break the lawmakers’ impasse and move toward a final bill.
WellPoint, whose rivals include Hartford-based Aetna Inc. and UnitedHealth Group Inc., which has operations in Hartford, is not the only health insurer to raise rates for individuals who buy their own policies rather than get coverage from their employers or government-run programs.
But Indianapolis-based WellPoint has become a clear target for Democrats looking to illustrate the need for change. Congressional proposals aim to expand insurance to roughly 30 million more Americans while cracking down on industry practices of denying policies for those with pre-existing conditions or imposing lifetime coverage limits.
The attention has battered WellPoint shares, which have underperformed rivals and the overall market since U.S. Health Secretary Kathleen Sebelius sent the company a letter earlier this month over the issue.
Wall Street analysts have said the hearing was unlikely to have much direct impact on WellPoint since insurers are currently regulated by the states, but persistent negative headlines could pressure its shares.
At 11 a.m., WellPoint was up 13 cents at $59.14.
Wednesday’s hearing ratchets up the heat on the health insurance industry, which has become Democrats’ main target in the fight to push reform. Obama’s plan, released on Monday, aims to bridge separate House and Senate bills and would give the federal government a greater role over premium rates.
The committee’s inquiry is also a test for Braly, a 48-year-old Texan whose policy experience was hailed when she landed the role of CEO in February 2007.
