Supporters of healthcare reform are pushing for action to take place as soon as possible. Despite its political risk and an increasingly skeptical public, President Barack Obama has continued to say that he won't give up on passing comprehensive medical insurance reform legislation.

Although millions of Americans are uninsured--a number that job losses may increase--over 70% still have health insurance. The downsides of healthcare reform, including tax increases and further addition to the deficit, are more relevant to them right now. However, the Obama administration is warning that an event regarding health insurance in California may be the nation's future if the status quo remains the same.

Recently, Anthem Blue Cross health insurance proposed a health insurance rate increase of up to 39%, beginning March 1st. Over 800,000 customers might be affected, and many of those customers vote. Health and Human Services Secretary Kathleen Sebelius has demanded a detailed explanation for the rise in medical insurance premiums. The state's insurance regulator, Steven Poizner, has also expressed his dismay. Although California does not require state approval for health insurance rates to increase, he has requested an inquiry from his department.

Anthem Blue Cross Blue Shield is a for-profit corporation, so what gives the federal government the right to get involved in its pricing decisions? That is a legitimate point. However, this particular price increase makes little economic sense. High unemployment rates have decreased the demand for health insurance--fewer people can afford it. The state of California has been especially hard hit by the recession. Basic microeconomics would predict that Anthem would lower its prices to increase its consumer base. Instead, rates have gone up.

There may be a legitimate explanation for the medical insurance cost increase: Anthem Blue Cross may be paying out more claims due to illnesses associated with obesity. They may also be spending money to battle medical malpractice lawsuits, many of which are frivolous. Moreover, the threat of such lawsuits encourages many doctors to perform unnecessary defensive medicine (and passing the cost onto their patients' health insurance).

Sebelius also wants Anthem Blue Cross and its parent company WellPoint to publicly disclose its medical loss ratio (MLR). The MLR indicates what percentage of health insurance premiums is spent on fulfilling claims and providing health care, versus how much is spent on administrative costs--including executive salaries. Medical insurance companies prefer lower medical cost ratios, because shareholders look upon them positively; customers, on the other hand, would prefer higher ratios. That way, they could pay less for the same level of care.

A spokeswoman for Anthem could not confirm or deny whether Sebelius' letter was received. It is doubtful whether the stern letter has enough bite to make an impact. After all, many health insurance companies do not appear to feel much shame after months of being vilified. Meanwhile, liberals believe that comprehensive health care reform could help reduce these problems. The public option, although doomed, could have provided more competition for Anthem. As a result, they may have been deterred from increasing rates. Even if only a small percentage of the population actually took advantage of the government run medical insurance program, proponents believe that a competing program without a profit motive would drive costs down. However, it is possible that bureaucratic inefficiencies would prevent the public option from significantly undercutting private rates while maintaining the quality of health care.

Meanwhile, February 24th will see a hearing on the issue in Congress. It was requested by Democratic Representatives Henry Waxman and Bart Stupak. Experts predict that health insurance premiums may see a similar rise nationwide, at a time when already insured Americans need a cost increase the least.