While Anthem Blue Cross has announced it will delay a rate hike for California customers, the move is being called a “temporary relief” and another reason for the federal government to move forward with comprehensive health reform.

Kathleen Sebelius

U.S. Department of Health and Human Services (HHS) Secretary Kathleen Sebelius said in a statement that Anthem’s decision to delay its rate request until May 1 “offers some temporary relief,” but more should be done.

“What California families need is long-term health insurance security, so that they don’t face sharply higher prices or fewer benefits,” she said in a statement. “This rate increase underscores the urgency of passing real health insurance reform.”

The comments came just days after Sebelius voiced her criticism of Anthem’s request to raise the premiums of some of its customers in California by 39%. The request also saw skepticism from California’s insurance commissioner, Steve Poizner, who said his office will conduct an independent actuarial review of the proposal and asked the insurer to delay its increase request.

Both Sebelius and Poizner wrote letters to Anthem and its parent company, WellPoint, seeking a delay.

WellPoint operates as Anthem Blue Cross in Virginia, outside of Northern Virginia, and as Empire Blue Cross in 10 New York City metropolitan and surrounding counties, as well as in several upstate counties in New York. The company, which also operates Blue Cross Blue Shield plans in 12 other states, is the largest private insurer based on membership.

If no reform, insurers continue to ‘prosper’

Brian A. Sassi, WellPoint’s president and chief executive officer for the consumer business unit, responded to Sebelius’ comments in an eight-page letter, dated Feb. 11. The letter reiterated what he described as the company’s compassion for its customers and explained the rate increases, which range from 20.4% to 34.9%, with the 39% the highest because of the impact of aging.

“Rate increases reflect the increasing underlying medical costs in the delivery system which are unsustainable,” Sassi wrote.

In response, Sebelius noted, as she did in her initial letter to WellPoint, that the parent company earned $2.7 billion in the last quarter of 2009 and to her, “it remains difficult to understand” how such a company “can justify massive increases that will leave customers with nothing but bad options.

“High health care costs alone cannot account for a premium increase that is 10 times higher than national health spending growth,” Sebelius said in a statement. “Without comprehensive reform, fewer people will be able to afford health insurance and Anthem’s decision to raise their rates only demonstrates the urgent need for real reforms that fix our broken health insurance system.”

She added that such reform would “end the worst insurance industry practices” and put doctors and patients, and not insurers, in charge of medical decisions.

“If we fail to implement reform, insurance companies will continue to prosper while families will continue to struggle,” she said.