Feinstein Calls On WellPoint Corporation to Cancel Proposed Premium Rate Hikes on California Policyholders
Following reports of 51 percent profit increase for WellPoint, Senator Feinstein Says Rate Increases Should Wait Until Rate Authority Can Review Plans
Apr 28 2010
Washington, DC – U.S. Senator Dianne Feinstein (D-CA) today called on health insurance corporation WellPoint Inc. to scrap plans for massive premium rate hikes of up to 39 percent on policyholders in California. Senator Feinstein issued her statement in response to news reports that WellPoint reaped a 51 percent increase in profits for the first quarter of Fiscal Year 2010.
WellPoint reported a net income of $876.8 million, with total revenues of $15.1 billion, according to the Associated Press. Profits in WellPoint's consumer segment increased by 49 percent, to $326 million.
Senator Feinstein said these massive profit gains were evidence that WellPoint is not hiking up rates on customers due to economic necessity, as the company claims, but as part of a coordinated strategy to drive up corporate profits. News of the company's massive profit increase comes two weeks after news reports revealed that WellPoint CEO Angela Braly received a 51 percent increase in her compensation last year.
WellPoint Inc. is the parent company of Anthem Blue Cross of California, which in February announced plans to impose rate hikes of up to 39 percent on 800,000 policyholders. The company has twice delayed the rate hikes in the face of widespread criticism from policyholders and public officials like Senator Feinstein.
"At a time when so many Americans are struggling to make ends meet in a tough economy, WellPoint is reaping a 51 percent increase in profits while simultaneously raising premium rates on hardworking California families by up to 39 percent. This is unconscionable," said Senator Feinstein. "WellPoint's actions are a textbook example of the profits-above-all-else Wall Street mentality that has caused major hardship for millions of average Americans. It’s time to break the profit-hungry habit.
“Therefore, I call on WellPoint to cancel its plans to increase premium rates on policyholders in California until the time when there is a national Health Insurance Rate Authority in place to review whether these rate hikes are justified -- and to protect policyholders from unfair corporate greed. WellPoint has already delayed these rate hikes twice, and they are still reporting a dramatic rise in profits. I urge WellPoint to reconsider its plans and wait until there is a proper Rate Review Authority in place."
Senator Feinstein has introduced the Health Insurance Rate Authority Act of 2010, which would empower the U.S. Secretary of Health and Human Services to review and reject unfair premium rate increases. The bill is co-sponsored by Senators Barbara Boxer (D-CA), Kirsten Gillibrand (D-NY), Jack Reed (D-RI), Bernard Sanders (I-VT) and Sheldon Whitehouse (D-RI). Rep. Jan Schakowsky (D-Ill.) has introduced a companion bill in the House of Representatives.
The bill would grant the Secretary of Health and Human Services authority to block premium rate increases that are deemed unjustified. The Secretary would work with the National Association of Insurance Commissioners to implement the rate review. States where Insurance Commissioners already have this power would not be affected. In states where Insurance Commissioners are not empowered - like California - consumers would get protection from unfair rate hikes.
The proposal would also create a Rate Authority, a seven-member advisory board to assist the Secretary.
The board would contain representatives from a wide range of interests: consumers, the insurance industry, medical practitioners, and other experts.
"I will do everything in my power to ensure that the Health Insurance Rate Authority becomes the law of the land," said Senator Feinstein. "Until then, I will be monitoring this situation closely."