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To keep health premiums down, 'rate review' bill would require states to ok increases

This article first appeared in the St. Louis Beacon, May 17, 2010 - When federal officials asked Missouri to look at recent premium rate increases by WellPoint-owned health plans, including Anthem, the state had a ready answer: Missouri doesn't get information about increased charges because it has no authority over health-insurance rates.

"We don't have that authority because health-insurance rates in Missouri are unregulated," says Travis Ford, spokesman for the Missouri Department of Insurance.

The issue is a heated one as the Obama administration seeks more control over health insurance costs following the enactment of heath-care reform. Many Senate Democrats fear health insurance premiums might rise rapidly before the full impact of the federal law takes effect in 2014. Led by Sen. Dianne Feinstein, D-Calif., Democrats want to give the federal government authority to review proposed rate hikes in unregulated states like Missouri to prevent "unreasonable" increases.



Some states, like California, have authority to review rates. But Feinstein's proposal would have a direct bearing on practices in Missouri. It is one of only three states, along with Montana and Wyoming, where insurers don't have to inform regulators about rate changes. Thirty states require state regulators to approve rate changes before the rates can go into effect. The remaining states have some notification requirement.

Rate hikes became a big issue after WellPoint-owned Anthem proposed to boost premiums up to 39 percent for some individual policies in California. The increases were delayed following a public outcry. When California's Insurance Department studied the proposal, it found "numerous errors" in the way Anthem had calculated the proposed rates. The California regulators also found that Anthem could actually cut its proposed rate hikes in some instances and still meet a 70 percent medical-loss ratio threshold. (A medical loss ratio is the percentage of the health insurance premium used to pay for health benefits. Under health reform, insurers will have to pay out 80-85 percent of premium in health benefits.)

California's findings are one reason Health and Human Services Secretary Kathleen Sebelius sent a letter to all states earlier this month, asking them to look at recent premium increases by WellPoint-owned companies.

The request by Sebelius took on personal meaning to some small business owners, including Clayton lawyer Arlene Zarembka. On Tuesday morning, she will appear at a WellPoint stockholders' meeting in Indianapolis to speak about what she calls ongoing frustrations with Anthem. The Beacon was unsuccessful in several attempts to get comments from Anthem and WellPoint about complaints in Missouri and nationally.

Zarembka, who has a solo law practice in Clayton with one paralegal as an employee, accused Anthem of supplying misleading information a year ago when it sought to boost to $2,000 from $1,100 the deductible for her paralegal. At first, Zarembka says she understood that her rates would rise 6.9 percent.

"But when I got the policy, I discovered that they had bumped my employee's deductible. I was livid because that wasn't the deductible she could afford."

After doing some research, Zarembka said she got on the phone with the company, which offered a range of explanations for the increase. Zarembka presented Anthem with her own research into deductibles, and the company eventually dropped the deductible down to $1,500. Zarembka says she still thought that was too high, but she accepted the change as a condition for getting insurance for her worker.

She says this issue is among the reasons the Feinstein bill, the Health Insurance Rate Authority Act, needs to become law.

"Up to this point WellPoint has been strenuously opposing the (rate review) bill," Zarembka says. "We will ask them to drop their opposition. If their rates are reasonable, they should have no concerns about an agency reviewing their rates."

Her presentation at the shareholders' meeting is part of an effort by the Main Street Alliance, a national network of small business coalitions, to influence the company's policies.

"The big concern is that small businesses across the country have had repeated problems with Anthem," she says. "Many shareholders are concerned that the Anthem and WellPoint business model keeps jacking up premiums and making 'mistakes' like they made in California. This could, in the long run, damage the company."

Funding for health reporting is provided in part by the Missouri Foundation for Health, a philanthropic organization whose vision is to improve the health of the people in the communities it serves.

Robert Joiner has carved a niche in providing informed reporting about a range of medical issues. He won a Dennis A. Hunt Journalism Award for the Beacon’s "Worlds Apart" series on health-care disparities. His journalism experience includes working at the St. Louis American and the St. Louis Post-Dispatch, where he was a beat reporter, wire editor, editorial writer, columnist, and member of the Washington bureau.

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