Insurance Rate Hikes Scrutinized On Capitol Hill As Anthem Forges Ahead With Increases In California

Insurance executives will be in the hot seat today as Congress probes scheduled health insurance rate increases for Anthem Blue Cross customers in California.

Democrats are putting the spotlight on Californians hurt by the rate hikes as witnesses today to put a real face on why health care reform is necessary. The Energy and Commerce panel's Oversight subcommittee hearing examining the rate increases was put together fairly quickly. From a political perspective, it's nicely timed to coincided with President Obama's health care summit tomorrow at the White House.

An executive from Anthem's parent company WellPoint told a California state Assembly panel yesterday they will forge ahead with the increases of as much as 39 percent after May 1, according to the Los Angeles Times. Earlier this month, Anthem was ordered to delay the increases to that spring date by the state's insurance commissioner.

We've been closely following this issue, which Democrats have held up as an example of what would change under their health care plan. Service Employees International Union today released a new ad with Anthem as its target and sources tell us that Democratic-leaning interest groups won't let up until health care legislation is passed.

The hearing will stream live here.

The invited witnesses from California are Jeremy Arnold of Los Angeles, Julie Henriksen of Westchester and Lauren Meister of West Hollywood. The panel also invited WellPoint executives Angela Braly and Cynthia Miller.

From the LA Times' writeup of yesterday's California hearing:

James Oatman, vice president of WellPoint Inc.'s consumer division, told the state Assembly's health committee that the premium increases, and the profit they generate, are appropriate despite wide criticism from consumers, regulators, members of Congress and the Obama administration.

"Are you planning to go forward with the rate increases?" Assemblyman Dave Jones (D-Sacramento), the committee's chairman, asked Oatman, who testified alongside Anthem's president, Leslie Margolin.

"We believe the rate increase we have applied for is consistent with all the laws of the state of California," Oatman said. "We are advocating that those rates are appropriate rates."

Oatman and Margolin defended Anthem's profit margin during an often-testy hearing, saying it was 2.5% to 5%, a figure that put it in line with other insurers, they said. A Times analysis of Anthem's financial reports to regulators showed Anthem has transferred more than $4.2 billion to WellPoint since 2004.

How much profit is enough?" Jones asked the two executives.

Late Update: At the opening of today's hearing, Rep. Bart Stupak (D-MI) cited WellPoint profits and said such problems are going to continue until reform passes.