Facing state lawmakers in Sacramento, executives for Anthem Blue Cross defended the companies decision to raise rates as much as 39% despite the organizations reported $2.7 billion profit in the last quarter of 2009.
James Oatman, vice president of WellPoint Inc.'s consumer division (WellPoint is Anthem's parent company), told Assemblyman Dave Jones during a health committee meeting that the company's decision was legal and they would go ahead with the move.
Quoted in the LA Times, Oatman said "We believe the rate increase we have applied for is consistent with all the laws of the state of California. We are advocating that those rates are appropriate rates."
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The company announced in November it would increase premiums by as much as 39 percent.
Anthem says it needs the double digit increase to keep pace with rising medical costs and because many of its younger, healthier customers have dropped their coverage during the recession. This leaves older and sicker people who tend to use more health services to share the costs.
According to KPCC radio, Health and Human Services Secretary Kathleen Sebelius said last week that profits for the country’s 10 largest insurance companies outpaced inflation in the last decade 10 to one.
Anthem’s parent, WellPoint, reported a $2.7 billion profit in the last quarter of 2009, KPCC reported.