WellPoint's Piracy

by John M. Curtis
(310) 204-8700

Copyright Feb.11, 2010
All Rights Reserved.                    

            Showing the kind of bravado and tone-deafness to health care’s recent political trends, Calfornia’s Anthem Blue Cross announced Feb. 4 a whopping 39% increase to potentially 800,000 subscribers.  Health and Human Services Secretary Kathleen Sebelius demanded an explanation prompting the head of WellPoint’s business service unit to respond in writing.  “It remains difficult to understand,” said Sebelius, asking how Indianapolis-based WellPoint could justify such exorbitant rate hikes when they posted a 2009 Q-4 profit of $4.75 billion.  Brian Sassi, head of WellPoint’s consumer business unit that handles Calfornia’s individual plans, blamed the rate increase on lower profits from the Great Recession causing a drop in individual plan sales.  Sassi insists that fewer subscribers have now left Calfornia’s Athem Blue Cross with less premiums to subsidize medical benefits to sicker subscribers.

            Claiming a dramatic reduction in sales of individual policies, Anthem Blue Cross justifies the rate hikes based on lower revenues.  Sassi claims that financially strapped Californians are dropping coverage, leaving Anthem Blue Cross short of premium dollars.  “When the healthy leave and the sick stay, that is going to dramatically drive up costs,” claiming his unit has lost business.  Blue Cross has lost business not because of the Great Recession but because of overpriced policies with poor benefits.  Anthem Blue Cross notoriously overprices individual plans, while they give better discounts and benefits to group plans.  It’s the difference between individual and group plans, including excluding preexisting conditions, prompting the Obama administration to ban the practice.  Anthem Blue Cross’ recent rate hikes help make Barack’s case for the nation’s health care reform.

          Sebelius ordered a federal inquiry in Anthem Blue Cross’s rate hikes, encouraging Congress to call WellPoint’s CEO Angela F. Braly to testify.  House Committee on Energy and Commerce and Subcommittee on Oversight and Investigation subpoenaed Braly to testify Feb. 24.  Braly need only review testimony by oil industry executives to know how cosmic temerity plays on Capitol Hill.  When ExxonMobil announced record profits in excess of $12 billion for Q-4 2007, the Senate Judiciary Committee dragged industry executives to testify May 21, 2008.  Industry executives had no problems explaining high pump prices and record profits as simple supply-and-demand, business-as-usual activity. Unlike the oil business, the insurance industry enjoys an antitrust exemption, permitting monopolies, like Anthem Blue Cross, to gouge consumers in individual states.

            When Democrats’ health care plans crashed-and-burned Jan. 19 with Republican Massachusetts’ state Sen. Scott Brown winning the late Sen. Ted Kennedy’s senate seat, President Barack Obama went back to the drawing board.  He asked Democrat and GOP House and senate members to convene a health care summit Feb. 25 to work out a bipartisan compromise.  Before Brown’s election, Democrats were prepared to call for a strictly party-line vote on a 2,700-page bill.  Republicans seek a new bill, believing the old one was too partisan and costly.  “If we don’t act, this is just a preview of coming attractions,” said Barack at a Feb. 9 press conference, referring to Anthem Blue Cross’ outrageous rate hikes.  Obama hoped his health care reform bill would open up competition and lower premiums.  Republicans were never sure what, if anything, the president’s bill would accomplish.

            Republicans want to start from scratch, believing Democrats’ old bill was too partisan to be salvaged.  Inviting both sides to the White House for a health care summit Feb. 25, Obama has an opportunity to show his leadership.  If Republicans insist on starting from square-one, Barack must start over.  Whatever happened before no longer counts and indeed gets in the way of making progress.  Barack should outline his major objectives and invite the GOP back to the table to get results.  It doesn’t matter how offended House Speaker Nancy Pelosi (D-Calif.) or Senate Majority Leader Harry Reid (D-Nev.) are with respect starting from scratch.  All that matters is that the president get meaningful health care reform to increase accessibility and control costs to American health care consumers.  With all the bitter partisan wrangling, there’s real value to starting over.

            When Obama convenes his health care summit Feb. 25, Democrats must start from scratch and turn a new page on bipartisan cooperation.  Without a supermajority, Democrats must end the hardball and negotiate in good faith for a real solution to the nation’s health care crisis.  Anthem Blue Crosss’ Feb. 4 announcement to raise rates on 800,000 California subscribers up to 39% demonstrates the urgency of insurance reform.  Insurance monopolies must be broken, never again allowing companies to fix prices and stifle competition.  Ending the insurance industry’s antitrust exemption, opening up borders for interstate competition and instituting a ban on the practice of excluding preexisting conditions should go a long way in improving outrageous insurance industry abuses.  Democrats and Republicans alike should confront the problems head-on and find a fix that works for all Americans.

John M. Curtis writes politically neutral commentary analyzing spin in national and global news.  He’s editor of OnlineColumnist.com and author of Dodging The Bullet and Operation Charisma.