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Anthem Blue Cross

Anthem Blue Cross is a major US health insurance provider which is a subsidiary of insurance giant Wellpoint. Anthem has about 800,000 customers, and has more individual policyholders in California than any other insurer. It is an independent licensee of the Blue Cross Blue Shield Association based in Thousand Oaks, California. [1]

Wellpoint had a net income of $2.49 billion in 2008, and $4.7 billion in 2009.[2]

Contents


Management

Anthem was led by Leslie Margolin, company president. She was named to the position in January 2008, and also served as CEO of the firm s Life and Health affiliate. Angela Braly is currently serving as CEO of the company.[3]

Controversies

Recissions

In 2007, the California Department of Managed Health Care (DMHC), a California state regulatory agency, investigated the company's policies for revoking (rescinding) health care insurance policies. The DMHC randomly selected 90 instances in which the company canceled the insurance of policy holders after diagnoses with costly or life-threatening illnesses, to determine how many cancellations were legally justified. The agency concluded that Anthem Blue Cross lacked legal grounds for canceling policies in every single instance. "In all 90 files, there was no evidence (that Blue Cross), before rescinding coverage, investigated or established that the applicant's omission/misrepresentation was willful," the DMHC report said. [4][5]

2010 rate increases

In February 2010 Anthem gained worldwide media attention and became a poster child for the problem of rising US health costs , when it announced that it was raising rates on some individual policy holders by as much as 39% as of March 2010.[6] The rate increase came one year after Anthem had raised rates 68% on individual policy holders.[7]

To explain the latest rate increases, some which were four times the rate of medical inflation, Anthem said the company has experienced a death spiral, as unemployment and declining wages lead healthy customers to drop their insurance, the remaining risk pool becomes sicker and more expensive to insure, and, in turn, prices are forced up and push more people out of the market.[8]

In response to the outrage from politicians and consumers, Anthem postponed the rate increase until May 1 2010.[9] Given Anthem s rate increase plans, Senator Diane Feinstein, Democratic Senator of California, has proposed giving the federal government authority to block insurance premium hikes considered to be unjustified. [10]

2009-10 security breach

In June 2010, Anthem sent letters to 230,000 customers in California warning them that their personal data might have been accessed online. After a routine upgrade in October 2009, a third-party vendor stated that all security measures had been properly reinstated, when in fact they hadn't. As a result, thousands of applicants for coverage who were under the age of 65 had their personal information exposed in the open. After a Los Angeles-area woman discovered her application for coverage was publicly available, she filed a class-action lawsuit against Anthem. While gathering evidence for the proceeding, the woman's lawyers downloaded some confidential customer information from Anthem's Website and alerted Anthem about the breach. According to the lawyers, confidential information had remained out in the open for five months.[11][12]

References

  1. Anthem blue cross raises premium, San Francisco Chronicle, Feb 6 2010, http://articles.sfgate.com/2010-02-06/business/17848006_1_health-insurance-department-of-insurance-plans-home-and-automobile-insurers
  2. Wellpoint profile, Businessweek, accessed Feb 26 2010, http://investing.businessweek.com/research/stocks/financials/financials.asp?ticker=WLP:US
  3. Anthem press release, http://www.anthem.com/wps/portal/ca/popcontent?content_path=shared/f0/s0/t0/pw_a120351.htm&label=Leslie%20A.%20Margolin%20Named%20President%20of%20Blue%20Cross%20of%20California
  4. http://www.commondreams.org/headline/2010/04/24-1
  5. Anthem blue cross raises premium, San Francisco Chronicle, Feb 6 2010, http://articles.sfgate.com/2010-02-06/business/17848006_1_health-insurance-department-of-insurance-plans-home-and-automobile-insurers
  6. San Francisco Chronicle, Anthem blue cross raises premiums, http://articles.sfgate.com/2010-02-06/business/17848006_1_health-insurance-department-of-insurance-plans-home-and-automobile-insurers
  7. New York Times, In California exhibit a on Insurance, Feb 16 2010, http://www.nytimes.com/2010/02/16/health/policy/16anthem.html
  8. Associated Press, Anthem to delay insurance rate hike amid criticism, Feb 13 2010, http://abcnews.go.com/Business/wireStory?id=9830192
  9. San Jose Mercury News, Feinstein takes on anthem blue cross, http://www.mercurynews.com/ci_14435478?source=most_viewed
  10. Perkes, Courtney. Personal data accessed on insurer Web site. The Orange County Register, 2010-10-23.
  11. Anthem Blue Cross security breached. KABC-TV, 2010-10-25.

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