Just as President Obama's push for health reform was threatening to collapse, big insurance companies may have given Democrats just the ammunition they need to win -- if they can capitalize on it.



In the wake of public outcry over WellPoint/Anthem Blue Cross of California's plan to jack up premiums by 39% for over 1 million members -- 10 times the rate of inflation -- news is emerging of similar rate increases across the South and country, driving up costs to consumers as high as 70%.

News reports show the premium hikes aren't limited to any one state or insurance company:

* GEORGIA: The Atlanta Journal-Constitution reports that Blue Cross Blue Shield of Georgia pushed up rates on one man by 72%. A BCBS-GA spokeswoman admits rates for many others are increasing up to 30%. WellPoint, a national insurer active in Georgia, jacked up premiums by 21% in 2009 and a similar increase is likely for 2010, according to a report released yesterday [pdf] by the Center for American Progress.

* NORTH CAROLINA: In North Carolina, the state Blue Cross Blue Shield affiliate "recently increased premiums 50 percent or more" for some members, "forcing them to drop coverage or switch to cheaper plans with fewer benefits and higher deductibles," according to the News & Observer.

* VIRGINIA: WellPoint is planning to increase rates 7 to 15% this year, according to the CAP report. [pdf]

The reports are especially alarming given that -- unlike other industries in the current recession -- WellPoint and other health insurers are enjoying record profits. According to a report released this week [pdf] by Health Care for America Now:

Executives and shareholders of the five biggest for-profit health insurers, UnitedHealth
Group Inc., WellPoint Inc., Aetna Inc., Humana Inc., and Cigna Corp., enjoyed combined profit of $12.2 billion in 2009, up 56 percent from the previous year. It was the best year ever for Big Insurance.

The pro-reform advocacy group goes on to say those profits were realized in part by "leaving
behind 2.7 million Americans who had been in private health plans."

Public outrage over the massive hikes would seem to be a boost to Obama and Democrats, who until now have seemed adept at snatching defeat out of the jaws of health reform victory.

At a White House health care summit today, Obama will discuss his plan create a new agency to review "excessive" rate hikes by state insurers. Obama is also pushing a provision from the Senate health bill which would provide up to $250 million to states to beef up their review of rate increases.

According to the Dallas Morning News, that would make a big difference in states like Texas which don't regularly review insurance rate increases. Blue Cross Blue Shield of Texas, one of the state's largest insurers, says it plans to increase premiums an average of 10% per customer in 2010.

UPDATE: HEALTH INSURANCE MONOPOLIES

The fact that insurance companies can dramatically increase rates without worrying too much about losing their customer base (and therefore long-term profits) is in part related to their near-monopoly control of the market in many states.

It's received almost no press, but the American Medical Association released their latest report on consolidation in the health industry this week. From the press release:

Competition in the health insurance industry is disappearing with more markets across the country dominated by one or two insurers [...]

In 24 of the 43 states reported in the new AMA report, the two largest insurers had a combined market share of 70 percent or more. Last year, just 18 of 42 states had two insurers with a combined market share of 70 percent or more.

"The near total collapse of competitive and dynamic health insurance markets has not helped patients," said AMA President J. James Rohack, M.D. "As demonstrated by proposed rate hikes in California and other states, health insurers have not shown greater efficiency and lower health care costs. Instead, patient premiums, deductibles and co-payments have soared without an increase in benefits in these increasingly consolidated markets."

Which is exactly what proponents of the public option have been saying all along.