Two months ago, healthcare reform looked all but dead. A Republican was elected to Ted Kennedy’s former seat in Massachusetts, leaving Democrats without the super majority needed to pass the legislation without facing a filibuster. The public was strongly against their proposals. Moreover, the Democratic party itself was split by issues such as abortion. Meanwhile, Republicans were unified in their opposition.

Less than a month later, the historic legislation passed both chambers of Congress. The House of Representatives passed the Senate’s legislation as-is, with the Senate then passing a package of tax- and budget related changes through reconciliation. After Republicans proposed a handful of amendments to minor elements against parliamentary rules (intending for the bill to come back for another vote, possibly wearing down wavering Democrats), the majority party quickly passed those proposals. Before April Fool’s Day, President Obama signed the bill. How did its prospects change so quickly?

A turning point in the momentum occurred in late February. Although Federal Reserve officials claim that the recession is officially over, its impact is still felt by millions of Americans. There has been virtually no inflation over the past several years, while the unemployment rate has skyrocketed and incomes have stagnated or lowered. Despite that, WellPoint–a major health insurance company in California and other states–made a business decision that reverberated around the country.

Citing increased health care expenses, WellPoint increased its rates. To some degree, that is understandable. However, the levels of the increases–effective May 1–were shocking. The average health insurance plan saw its premiums go up by over 10 percent, with some consumers being greeted with 39% increases!

Supporters of health insurance reform ran with the news. They saw these actions as proof that something needed to be done. Otherwise, health insurers would continue to profit at the public’s expense. Secretary of Health and Human Services Kathleen Sebelius asked WellPoint for a letter justifying their rate increases, which will now be required under the new law. The law also gives the federal government the power to regulate and limit rate increases, a power many states do not currently have.

WellPoint’s actions are largely responsible for reigniting a bill that was dying on the vine. The rate increases convinced most Democrats in Congress to band together, including liberals wary of a bill lacking a public option. Therefore, the increases served as a public relations disaster that will largely end up biting health insurance companies in the end for short term profits.

Unfortunately, it seems as if the insurer may not have learned its lesson. Their CEO, Angela Braly, had her annual compensation increased to $13.1 million in 2009. Many people have found it difficult to sympathize with one of the few industries that has benefited by the recession. These public moves only serve to ignite anger and further invite strict regulation.

Yamileth Medina is an up-and-coming expert on the health insurance industry. She strives to provide balanced facts about health care reform and other issues in an easily understood manner. Yamileth lives in Miami, Florida.

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