ABC Asks if Insurance Premium Hikes are 'Legal'

Following the White House’s lead, “Good Morning America” criticized insurance companies on Feb. 17 going so far as to insinuate they might be breaking the law by raising premiums.

“Now to the outrage over skyrocketing health insurance premiums, some Americans covered by Anthem Blue Cross were recently hit by a whopping 39 percent rate increase. President Obama called out Anthem and a congressional hearing on this big rate hike is coming next week, but in the mean time regulators are trying to determine if rate hikes like this are even legal,” George Stephanopoulos said.

Those rate hikes averaging around 24 percent but as high as 39 percent could impact about 800,000 individual policyholders in California.

Health and Human Services Secretary Kathleen Sebelius, the White House and Congress have demanded Anthem Blue Cross provide a detailed justification for the rate increases.

Likewise, GMA demanded to know why. Its onscreen headline read: “Tough Questions to Insurance Company: Can They Justify Big Rate Hikes?”

Golodryga interviewed someone from the liberal group HealthCare for American’s Now (HCAN) who called the rate hikes outrageous at a time when “companies are posting big profits.”

She also included footage of Obama attacking insurance companies saying, “If we don’t act this is just a preview of coming attractions.”

But profits are already limited given state regulations. California requires insurers spend at least 70 cents of every dollar from premiums on medical care. But according to a Wall Street Journal interview with Wellpoint’s CEO Angela Braly, 85-cents or more from every premium dollar is paid out for the actual costs of care. Anthem Blue Cross is a subsidiary of Wellpoint.

Brad Fluegel, vice president of strategy at Anthem Blue Cross, told Golodryga said rising medical costs and the troubled economy were to blame for their rate hikes.

“The amount we get charged by hospitals are going up, pharmacy costs are going up, and because of the difficult economy what we’re finding is a lot of younger and healthier individuals are dropping their coverage,” Fluegel said.

As for the legality of the rate hike, Golodryga could have looked to Oregon. She didn’t mention that many insurers in Oregon recently increased their premiums significantly, higher than 25 percent in some cases.

Associated Press reported that after investigation, Oregon state officials concluded that premium increases were justified because most insurers cut rates too much in 2006 leading to significant losses.

This was the second time in just over a week that Anthem Blue Cross and Wellpoint were scrutinized by “Good Morning America.”

