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UPDATE 2-U.S. House panel sets hearing on Wellpoint rates
* Lawmakers ask Wellpoint CEO to testify
* Hearing set for Feb 24
* Wellpoint says reviewing letter from committee (Adds company comment, details of lawmakers' request, byline)
By Lisa Richwine
WASHINGTON, Feb 9 (Reuters) - U.S. lawmakers on Tuesday called upon health insurer Wellpoint's (WLP.N) chief executive to testify about reports that a subsidiary will hike some premiums by as much as 39 percent.
House Energy and Commerce Committee Chairman Henry Waxman and Representative Bart Stupak, both Democrats, sent a letter to Angela Braly requesting her testimony at a Feb. 24 hearing after reports of premium hikes by Anthem Blue Cross of California, a Wellpoint unit.
The Los Angeles Times reported last week that about 800,000 Anthem Blue Cross of California customers with individual health insurance plans would see their rates spike by as much as 39 percent on March 1. Anthem is a subsidiary of Wellpoint.
In the letter to Braly, the lawmakers said the panel's oversight and investigations subcommittee was investigating the reports. They sought information and internal documents, including "a detailed explanation of the reasons for the premium rate increase proposed by Anthem Blue Cross in California."
The lawmakers also asked for a list of proposed premium hikes from January 2009 through December 2010 and details on premium revenue, claims payments, expenses and profits for individual health insurance products from 2005 to 2008.
U.S. health insurers have been a prime target for Democrats, now forced to revise their strategy for expanding health insurance access after losing their supermajority in a special Senate election last month.
Health and Human Services Secretary Kathleen Sebelius also sent a letter to Anthem on Monday asking for details on the reported rate hike. Sebelius said she was "very disturbed" by the situation. State authorities in California also are probing the matter.
Wellpoint spokeswoman Kristin Binns said on Tuesday the company was reveiwing the congressmen's letter.
Anthem spokeswoman Peggy Hinz on Monday had said the comapny had not made public any specific rates. (Reporting by Lisa Richwine; editing by Carol Bishopric, Leslie Gevirtz)
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Demographics and the aging population – Older people in general require more health care. The population of the US is aging and that will force up the aggregate costs of healthcare. In addition, since the number of people paying taxes will fall at the same time, the burden on each taxpayer will increase even faster.
Americans smoke too much, drink too much, eat too much and eat the wrong foods, and get too little activity – Bad lifestyle choices will continue to force up health care expenditures.
Malpractice – In the end, the costs of the obscene malpractice awards are passed on to the person buying health insurance. Since these costs are included in the costs of doing business of drug companies, medical equipment produces, hospitals, and physicians, the rates and prices that are charged to health insurers is higher. Also, these costs force up the cost of malpractice insurance which is also passed on to the health insurer. That just pushes up the cost of health insurance. These obscene malpractice awards also prompt doctors to order more tests and procedures in order to do CYA.
Cost of medical research – Most of the easy to discover drugs, procedures, and devices have been found. The education and experience required to be at the cutting edge of medical research requires a huge investment of time and money. Very few people are going to pursue those fields if they cannot expect to be well compensated. Also, the complexity of the equipment used in cutting edge medical research is increasing rapidly. That costs money just like the research itself.
It is clear the only major cost item that could yield large cost savings is malpractice and that is not even being addressed in the current plans. Also, the US is financing most of the medical research budget through higher drug prices but that opportunity to reduced costs has also been negotiated away by the current administration.
Short of passing laws withholding healthcare from people as they age (health panels) or passing laws to force people to make better lifestyle choices, the current administration has eliminated the opportunities where real savings could be realized.
The current plans being proposed will not reduce costs but they will provide a bunch of high paying government jobs that we as taxpayers will pay for.
What is actually needed is to remove the barriers that retard competition between health insurance companies. Also we need to provide a framework where insurers can compete more effectively if they achieve better lifestyle choices among their insured.
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