This may be why consumers can get so irate over insurance companies.

The Los Angeles Times reported that Anthem Blue Cross, California’s largest private insurer, is planning on raising premiums on its individual insured’s by 39% on March 1^st.  The estimated 800,000 customer’s also were informed that the premiums may be adjusted more frequently than the typical yearly increases.

This comes after the company reported earnings of $2.7 billion in the last quarter of 2009. They also reported an increase in revenues from $15.0 billion to $19 billion—a jump of 26%.

White House Reactions

Reaction was swift. Secretary of the Department of Health and Human Services, Kathleen Sebelius, wrote a letter to the company asking for a detailed justification for the rate increases. She also asked the company to provide the percent of the individual market premiums that are being used for medical care versus administrative costs.

Sebelius suggested these “extraordinary increases” threaten to make health care unaffordable for hundreds of thousands of Californians. She also said she would be closely monitoring the situation.

President Obama has even used this information to support his contention that health care costs will rise if the legislature stalls on passing the type of healthcare reform he is seeking.

Anthem Blue Cross Response

The company acknowledged they received the Secretary’s letter and said they will reply promptly. They did say that in a weak economy, many people do not buy health insurance. This leaves fewer people in the insurance pool. They often have greater medical needs which impact everyone.

Photo via laurakgibbs