Archive for Friday, February 12, 2010

WellPoint insurance price spike becomes target for Obama

February 12, 2010


— Health insurer WellPoint blames the Great Recession and rising medical costs for its planned 39 percent rate increase for some California customers. To President Barack Obama, however, it’s Exhibit A in his campaign to revive the health care overhaul.

Health and Human Services Secretary Kathleen Sebelius, who received the company’s explanation in a letter Thursday, said “it remains difficult to understand” how premium increases of that size by can be justified when WellPoint Inc. reported a $2.7 billion profit in the last quarter of 2009.

“This is a stark illustration of what the status quo means for American families,” said White House spokesman Reid Cherlin. “You’d be hard-pressed to find a better example of why reform is so urgent, and it’s going to continue to be part of the case the president makes.”

Majority leader Harry Reid, D-Nev., went further. In a speech on the Senate floor, he attacked WellPoint and other “greedy insurance companies that care more about profits than people.”

“They get rich while people who already can barely afford their coverage lose their coverage altogether,” Reid said.

Whether it will be enough to re-ignite the sputtering health care legislation remains uncertain. The Democratic bills are stalled for political and policy reasons unrelated to insurance costs. Democrats in the House can’t accept the health care bill that Democrats in the Senate have produced, and vice versa. There are also concerns about the cost of the legislation.

The rate increase shock, however, could help Obama make his case that Republicans need to come to the table on health care. GOP leaders, who want to start talks over from scratch, are going reluctantly to the Feb. 25 health care summit convened by the president.

Brian Sassi, the head of WellPoint’s consumer business unit, said in his letter to Sebelius that the weak economy is leading individual insurance buyers who don’t have access to group plans to drop coverage or buy cheaper plans. That reduces the premium revenue available to cover claims from sicker customers who are keeping their coverage.

The result was a 2009 loss for the Anthem Blue Cross unit that sells individual policies to people who don’t get insurance through their employers, he said. Higher rates for this group, which accounts for about 10 percent of Anthem’s eight million customers in California, are needed to cover the shortfall expected from the continuation of that trend, according to the letter.

“When the healthy leave and the sick stay, that is going to dramatically drive up costs,” Sassi said in an interview. He declined to specify the size of the unit’s loss.

Affected customers can choose plans with lower premiums but higher out-of-pocket costs, he said.

Sassi told Sebelius that insurance costs also continue to rise because medical prices are increasing faster than inflation, and people are using more health care. That use increase is driven by an aging population, new treatments and “more intensive diagnostic testing,” he wrote.

Sebelius ordered a federal inquiry earlier this week after the size of proposed premium increases for individual policies was widely publicized. A congressional committee also has asked for information on the increases and requested testimony from WellPoint CEO Angela Braly at a Feb. 24 hearing.

“A lot of companies are hurting in this economy, but this California health company isn’t one of them,” Reid said, citing Wellpoint’s profits.

“That’s why we need health reform like the bills already passed by the House and Senate that will rein in insurance company abuses and make coverage more affordable for millions of Americans, and provide coverage for some 30 million that have no health insurance,” he said.

But Sassi disputed that notion in his letter to Sebelius. He said both the House and Senate bills carve too many loopholes from a requirement that everyone buy health insurance. He said they are also weak on enforcement and set penalties that are too low to ensure compliance.


just_another_bozo_on_this_bus 8 years, 1 month ago

This shows why single-payer or some other truly comprehensive reform is necessary. Tweaking around the edges while forcing people to buy insurance from the likes of Anthem will do very little to improve things.

Flap Doodle 8 years, 1 month ago

Dear Leader is directing the howling mob to an new target. Stay tuned to see who is next.

Richard Heckler 8 years, 1 month ago

If you’ve been watching the Senate Finance Committee’s markup sessions, maybe you’ve noticed a woman sitting behind Committee Chairman Max Baucus. Her name is Liz Fowler.

Fowler used to work for WellPoint, the largest health insurer in the country. She was its vice president of public policy. Baucus’ office failed to mention this in the press release announcing her appointment as senior counsel in February 2008, even though it went on at length about her expertise in “health care policy.”

Now she’s working for the very committee with the most power to give her old company and the entire industry exactly what they want – higher profits – and no competition from alternative non-profit coverage that could lower costs and premiums.

A veteran of the revolving door, Fowler had a previous stint working for Senator Baucus – before her time at WellPoint. But wait, there’s more. The person who was Baucus top health advisor before he brought back Liz Fowler? Her name is Michelle Easton. And why did she leave the staff of the committee? To go to work – surprise – at a firm representing the same company for which Liz Fowler worked – WellPoint. As a lobbyist.

You can’t tell the players without a scorecard in the old Washington shell game. Lobbyist out, lobbyist in. It’s why they always win. They’ve been plowing this ground for years, but with the broad legislative agenda of the Obama White House – health care, energy, financial reform, the Employee Free Choice Act and more – the soil has never been so fertile.

The health care industry alone has six lobbyists for every member of Congress and more than 500 of them are former Congressional staff members, according to the Public Accountability Initiative’s LittleSis database.

Just to be certain Congress sticks with the program, the industry has been showering megabucks all over Capitol Hill. From the beginning, they wanted to make sure that whatever bill comes out of the Finance Committee puts for-profit insurance companies first -- by forcing the uninsured to buy medical policies from them. Money not only talks, it writes the prescriptions.

In just the last few months, the health care industry has spent $380 million on lobbying, advertising and campaign contributions. And -- don’t bother holding onto your socks -- a million and a half of it went to Finance Committee Chairman Baucus, the man who said he saw “a lot to like” in the two public option amendments proposed by Senators Rockefeller and Schumer, but voted no anyway.

The people in favor of a public alternative can’t scrape up the millions of dollars Baucus has received from the health sector during his political career. In fact, over the last two decades, the current members of the entire finance committee have collected nearly $50 million from the health sector, a long-term investment that’s now paying off like a busted slot machine

tomatogrower 8 years, 1 month ago

snap_pop_no_crackle (Anonymous) says… Dear Leader is directing the howling mob to an new target. Stay tuned to see who is next.

Oh poor corporation, they'll only make 2B in profit this quarter. How can we pay all those bonuses? We'll lose our people, and how can we replace them with new ones? They might have ethics and be whistle-blowers and then we will lose our cushy lives, and have to live in a 3 bedroom house with only 2 cars that aren't even this year's latest models. And my wife will have to fire the nannies and take care of the kids herself. How will she find time to shop and go to the spa? She might leave me. And I'd have to fly commercial. Sure first class is comfortable enough, but all that scum has to pass through first class to the scum section of the plane. I'll loose my private jet! No, no we must have the rate increases now. Poor, poor me.

tomatogrower 8 years, 1 month ago

Wake up people!!! Can't you see how you are getting ripped off, so you can read about the lives of the rich and famous, and pretend someday I'll be there too? You won't. And these people are only there from your labor. Their job isn't that much important to a company than anyone else's. They should make more money, but not at the rate they do. They are destroying the middle class which has made our country stable. If they continue, they will create a backlash that won't be pretty for any of us. They are shortsighted in how they run their business and shortsighted in what will happen to them in the end. They only think about the here and now which is not real leadership, I don't care how much money they make for their company this quarter. How about the stability of their company 100 year from now?

tomatogrower 8 years, 1 month ago

And is this headline not just the most obvious? It should say "People Become Target of Greedy WellPoint". But I forgot that would be biased reporting. Making it look like the government is picking on a poor only filthy rich, not incredibly filthy rich corporation is fair and balanced reporting.

Richard Heckler 8 years, 1 month ago

I find it difficult to believe that anything will become of this. This industry has been spending $1.4 million a day to defeat reform using the Chamber of Commerce as it's money laundering arm and coordinating firm.

Sen Max Baucus was a leading adversary of health insurance reform with two WellPoint people on his staff and some of his former staff went to work for WellPoint.

Baucus has been a leading Public Option adversary as well.

In the meantime 20%-25% increases are being seen without fanfare. Meet the status quo aka the repub plan.

Are people seeing 20%-39% pay increases?

Meanwhile local economies are being subjected to abuse as well:

So between status quo medical insurance price increases and a variety of free lunch menus where's the money?

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