Why The WellPoint Case Matters

Just a few thoughts about why this WellPoint case matters to the overall health care reform debate:

• Maine is a "swing state" for health care reform - Given its Senators, and given this behavior by the insurer who controls over 70% of the local market, obviously a scandal like this in Maine, where Anthem is literally suing the state to guarantee a profit, is deeply embarrassing to the political class if it spreads and becomes a big story.

• Regulation alone cannot work - Here we have a state where insurance companies are regulated much like a public utility. The Superintendent is vested with the power to protect consumers and ensure reasonable rates. And despite that, the insurance company sues for a better profit margin. This is not entirely abnormal among utilities, who troll for a friendly judge to allow them to raise their rates. In the area of health care, however, we are being told that tough regulations will solve the problem of skyrocketing premiums and get everyone covered. I think we know what to expect - lawsuits like this in every state, with private corporations arguing that their corporate personhood status somehow entitles them to a profit - that's basically what they're saying in this lawsuit.

• The for-profit health care system is doomed - in this case, the Maine Superintendent of Insurance allowed Anthem to raise their rates by 10.9% to reach an actuarial "break-even" rate. Over the past ten years, they have raised their rates by double digits 8 times. If you had an individual plan in Maine in 1999, today it probably costs FOUR TIMES as much. That's just not sustainable for anybody. Before long, people will simply not be able to carry health insurance. And they will easily reach the hardship exemptions in the individual mandate in the Congressional bills. If you have to raise your prices by 11% every year just to break even, your business doesn't work. Increasingly, insurance companies are losing market share and only staying in business due to growth in Medicaid and Medicare. Government subsidization of this private industry, in other words, is keeping them alive. So why keep them afloat at all?

In short, this is an important case to expose to understand insurance industry practices and the future of health reform.