Reporting from Los Angeles and Washington — On a warm Friday in early November, California's largest for-profit health insurer submitted a plan to regulators in Sacramento. Anthem Blue Cross was seeking double-digit rate increases for many of its 800,000 individual policyholders.
Company executives had little reason to worry. Insurers can raise premiums in the individual market as often -- and as much -- as they like, within certain guidelines. For years, such requests were routinely approved. They rarely made news.
In Washington, Democrats were scrambling to pass sweeping healthcare legislation, the centerpiece of President Obama's domestic agenda and a dream of party leaders for more than half a century. The day after Anthem's filing, the bill passed the House on a cliff-hanging vote. Weeks later, the measure passed the Senate without a vote to spare.
There was still plenty of work ahead, but, finally, after months of ups and downs -- after rowdy town hall meetings, backroom deals and back-to-the-wall presidential speeches -- it looked to Democrats as though victory was in sight. That would soon change.
The same day as the Senate vote, Anthem received some brief questions from the California insurance commissioner's office. The follow-up involved minor details; there were no questions about the rate hikes themselves, which ranged up to 39% for some Anthem customers.
By early February, word of the increases was trickling into mailboxes across California, surprising policyholders just as the politics of healthcare had radically shifted. The overhaul legislation, if not dead, was in serious trouble.
Unwittingly, Anthem helped revive Democratic efforts. Every letter it sent out was a political gift for Obama. The only thing missing was a shiny red bow.
A bit of news
Each morning, White House officials wake up to a news summary, a stack of clippings printed and neatly stapled to offer a headlined view of the world. On Feb. 5, snow was falling in Washington, and the healthcare bill, for all intents, was in deep hibernation.
Two weeks earlier, Massachusetts Republican Scott Brown won a stunning upset in a special election to replace the late Sen. Edward M. Kennedy. Democrats were humiliated. Even worse was seeing an avowed foe of Obama's healthcare legislation succeed Kennedy, whose dying wish was to expand insurance coverage to tens of millions of Americans.
Brown's victory gave the GOP the crucial 41st vote needed to block final passage. Obama decided a "summit" -- a televised meeting with Democrats and Republicans for them to hash out, or at least argue over, their differences -- was his last and best shot at prevailing.
"The president's view was that we can't let healthcare die on the vine, or stay in limbo," said Dan Pfeiffer, a senior White House strategist. No one was likely to switch positions. But a show of reaching out would offer some cover should Obama, lacking bipartisan support, try to muscle the bill through Congress with only Democratic votes.
Plans were underway to announce the summit as Pfeiffer thumbed through the White House news summary for Feb. 5.One story leaped out: a Times article that described people outraged over Anthem's plans "to dramatically raise rates." Pfeiffer, who helps formulate and drive the president's message, flagged the article for others in the White House. Many had already read the piece.
The president's political team immediately saw what Anthem had done: The company had given Obama, who struggled for months to find a cogent argument, a simple way to crystallize his case for change.
Much of the debate over the healthcare overhaul was esoteric -- what's the difference between a cooperative and a healthcare exchange, anyway? For many Americans, the whole issue seemed irrelevant. After all, most have insurance, and polls suggest that many, if not entirely satisfied, are happy enough with the system as it is.
Obama and his allies had been arguing, not very successfully, that doing nothing had a price, that rising healthcare costs would cripple the economy and rising premiums would eventually force many of the insured to drop their coverage. Anthem's whopping rate increases were an example the White House could cite and -- better still -- something people could easily understand.
Most Americans had never heard of Anthem, much less the impending rate hikes. The White House was determined to change that.
When Anthem submitted its seven rate proposals -- 70 pages in all -- to the office of Insurance Commissioner Steve Poizner, executives at the company and its corporate parent, WellPoint Inc., expected some customer complaints but not a huge outcry.
The rate increases, averaging 25%, would affect only Anthem's individual policyholders, a small portion of California residents. Most people in the state who are insured receive coverage through their employers.