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Obama administration urges states to review WellPoint rate increases

May 5, 2010 | 12:00 pm

The Obama administration is urging states to reexamine rate hikes proposed by insurance giant WellPoint Inc. after its California subsidiary withdrew planned increases last week because of serious mistakes in its filing.

Anthem Blue Cross canceled the increases of as much as 39% for individual policyholders in California after a consultant for the state insurance commissioner found several flaws in the way it justified the hikes for many of its 800,000 individual policyholders in the state.

Health and Human Services Secretary Kathleen Sebelius advised states this week to take a closer look at WellPoint rates in the aftermath of the uproar.

Sebelius “In light of this recent finding, I urge that, to the extent you have authority to do so, you reexamine any WellPoint rate increases in your state to determine whether any mistaken assumptions similar to those made in California were made in your state,” Sebelius wrote to the nation’s governors. “Even small errors can mean unaffordable premiums for policyholders.”

WellPoint said the errors in California were the result of “inadvertent miscalculations” and that Anthem would file new rate increases this month.

Spokeswoman Kristin Binns said WellPoint rates across the country were based on projections of medical costs in the year to come and fell “within a band of what is reasonable and actuarially sound in each market.”

Binns added: “We believe the miscalculation was unique to the individual business rate filing in California. Further, we believe that our rates are in compliance with statutes and regulations in the states that we do business. We plan to continue working closely with state regulators going forward.”

-- Duke Helfand

Photo: Health and Human Services Secretary Kathleen Sebelius. Credit: Frank Franklin II / Associated Press