UPDATE 1-U.S. states are urged to check WellPoint rates

Wed May 5, 2010 1:49pm EDT

* U.S. health secretary writes governors

* Says states should ensure enforcement power

* California miscalculation isolated case-WellPoint (Adds WellPoint comment, updates shares)

WASHINGTON, May 5 (Reuters) - U.S. Health Secretary Kathleen Sebelius is calling on states to re-examine WellPoint Inc's (WLP.N) health insurance rate increases.

In a letter to state governors released on Wednesday, Sebelius urged them to check WellPoint's accounting assumptions and ensure that state insurance offices have the power to review and approve any insurance rate increases.

WellPoint has been battered amid the recent healthcare reform debate as Democratic lawmakers pointed to the company's Anthem unit in California, which increased rates in some cases as much as 39 percent.

The insurer recently withdrew that increase after California officials found it was based on "unreasonably high assumptions" about rising medical costs, Sebelius wrote.

"In light of this recent finding, I urge that, to the extent you have authority to do so, you re-examine any WellPoint rate increases in your state to determine whether any mistaken assumptions similar to those made in California were made in your state," she said.

"Even small errors can mean unaffordable premiums for policyholders," she added.

WellPoint spokeswoman Kristin Binns said that "the miscalculation was unique" to its filing in California.

She added that health insurers have to file their next year's rates "based on actuarial projections of medical trends in advance for the year to come."

Despite the healthcare reform law passed in March, the review of health insurers' annual premium increases remains largely in states' hands. A bill being considered by Democrats in Congress would give the U.S. health secretary power to review and reject premium increases found to be unfair.

Shares of WellPoint were off 9 cents, or 0.2 percent, at $52.51 in afternoon trade the New York Stock Exchange.

A copy of the letter to state governors is on the U.S. Department of Health and Human Services website here. (Reporting by Susan Heavey; editing by John Wallace and Gerald E. McCormick)

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