What’s the point, WellPoint?

Introduction

Executives at health insurance giant WellPoint are predicting they will have to implement “double-digit plus” rate increases next year, demonstrating once again just how politically tone deaf and profit-obsessed they apparently are.

When I read WellPoint CEO Joe Swedish comments in Modern Healthcare that, there will “undoubtedly be remarkable price increases” for health insurance sold through the Obamacare-created exchanges, I remembered the outrage his firm provoked four years ago when it told its Anthem Blue Cross of California policyholders that it planned to hike their premiums by as much as 39 percent. When many of those policyholders complained to the media and members of Congress, it all but assured the passage a few weeks later of the Affordable Care Act, which contained numerous consumer protections and regulations the insurance industry hated.

Just before news of WellPoint’s proposed rate increase reached Capitol Hill in February 2010, reform advocates feared the legislation would indeed fall short of the needed votes.

But when WellPoint’s rate increase plans made headlines, Democrats seized on it, especially after California’s Republican Insurance Commissioner at the time, Steve Poizner, threatened legal action against the company.

The rate hikes “could have a devastating financial impact on hundreds of thousands” of the company’s policyholders, Poizner wrote in a letter to then-CEO Angela Braly.

In Washington, Democratic Rep. Henry Waxman, the chairman of the House Energy & Commerce Committee — whose district included many of the 800,000 Californians affected by the proposesd rate increase — launched an investigation and sent a letter to Braly asking her to justify the company’s actions.

In her own letter to Braly, Secretary of Health and Human Services Kathleen Sebelius wrote that the WellPoint proposal “reminds us that too many Americans can be left with unaffordable insurance each time the rates or rules change in the private market.”

The proposed rate increase, which came just days after the company reported $4.7 billion in profits for 2009, almost twice as much as the year before, also gave President Obama what might have been his most effective talking point for reform. “If we don’t act, this is just a preview of coming attractions,” Obama said. “Premiums will continue to rise for folks with insurance. Millions more will lose their coverage altogether (and) our deficits will continue to grow larger.”

Within six weeks, Obama was able to sign into law the bill that undoubtedly will be his most important legacy.

Four years later — almost to the day — WellPoint executives were once again talking about massive rate increases.

At WellPoint’s annual “investor day” on March 21, Executive Vice President Ken Goulet said he expected rate increases for 2015 to be “in double-digit plus.”

That bombshell came just moments after he told the shareholders and Wall Street financial analysts in the room that the company felt good about how it had priced its plans on the exchanges.

“We’re very optimistic as to where we are,” Goulet was quoted as saying. He added that the average age of folks who enrolled in WellPoint’s plans “came in right where we expected it to be.”

Earlier that day, by the way, WellPoint raised its 2014 profit forecast after saying it expected to add more than a million new customers — with half of them coming from the Obamacare exchanges — by the end of this year.

Once again, HHS Secretary Sebelius was ready with a response. Discounting WellPoint’s prediction, she said that overall, premium increases next year would be “far less significant than they were before the passage of the Affordable Care Act.”

As Bloomberg News pointed out in a story about WellPoint’s investor day comments, people who bought their own insurance in 2009 for coverage in 2010 paid 13 percent more than the year before.

WellPoint found itself all alone in suggesting what its rates will be next year. No other company seemed the least bit interested in making predictions. Humana declined to comment. An Aetna spokeswoman was quoted as saying only that, “It’s too early to say.”

Which of course it is. Insurers have two more months to analyze claims data and other numbers before they’re required to let the government know what they plan to charge for exchange plans in 2015.

Meanwhile, Santa Monica-based Consumer Watchdog, which is supporting a ballot initiative that would give California’s insurance commissioner the authority to reject unreasonable rate increases, jumped on Goulet’s and Swedish’s comments.

“Is anyone surprised that WellPoint intends another year of outrageous rate increases when no one has the power to open their books and make them explain how they’re spending consumers’ premiums?” Consumer Watchdog’s Carmen Balber asked in a press release.

Just as it was opposed to many of the new regulations and consumer protections in the Affordable Care Act, WellPoint, along with other insurers, is fighting that California ballot initiative. But if it does indeed hike rates by double digits later this year, that initiative just might pass.