to maintain higher profits
By Igor Volsky
February 24, 2010
Today, during a hearing before the House Energy and Commerce Health Subcommittee, Reps. Bart Stupak [D-MI] and Henry Waxman [D-CA] questioned WellPoint CEO Angela Braly about the company’s proposed rate increases in California’s individual health insurance market. The congressmen read from a series of internal company emails which revealed that WellPoint was rising premiums simply to increase its profits:
– “The average increase is 23 percent and is intended to return California to a target profits of 7 percent, versus 5 percent this year.”
– “We’re asking for premiums that would put us $40 million favorable… if we get the increases on time, we will see an opt gain upside of $30 million downgrades and rate cap.”– “[W]e needed to reach agreement on filing strategy quickly — specifically in the area of do we file with a cushion allowed for negotiations.”WellPoint acknowledged setting its increases to keep up with medical costs and maintain a 2% profit, but justified the increases by arguing that the company lost money in the individual market in California. “I don’t mind you making a profit but at the end of the year, 2009 a horrible year, you still made 2 point something billion dollars, and that’s not enough,” Stupak remarked, noting that WellPoint’s high profit margin is the reason “many of us believe in a public option.”
Blue Cross parent hiked rates after paying out $39 million in bonuses
By Sahil Kapur
February 25, 2010
Blue Cross parent hiked rates after paying out $39 million in bonusesCalifornia’s Anthem Blue Cross justified its whopping 39 percent insurance premium hike by citing rising medical costs. But, it turns out, its parent company Wellpoint, Inc. has been spending tens of millions on large executive bonuses and fancy retreats. According to congressional investigators, Wellpoint dished out over $1 million in bonuses to each 39 executives, and spent at least $27 million on 103 lavish company trips, McClatchy reports.
The revelation throws something a wrench into the claim by WellPoint’s president and chief executive officer Angela Braly that the rake hikes were an effort to remain financially solvent, which she said before the House committee. "Raising our premiums was not something we wanted to do," Braly said. "But we believe this was the most prudent choice given the rising cost of care and the problems caused by many younger and healthier policyholders dropping or reducing their coverage during tough economic times."She claimed the company’s decision was "actuarially sound and in full compliance with all requirements in the law"…
Medical insurance has always been a numbers game I’m sure, but it wasn’t until the late 1980’s that Insurance and Hospital Corporations lost the point of their existence and became "just business." I recall watching it happen but thinking surely someone would stop it. No one did. Wave after wave of "bean counters" armed with Lotus 1-2-3 Spreadsheets invaded medical care and turned it into what it has become – corporate piracy. I know it won’t happen in any of our lifetimes, but I’d be fine with socializing the whole endeavor. The current Medical Insurance, Pharmaceutical Industry, and Hospital Corporation mentalities simply have no place in Medicine.