WellPoint Anthem Retreats From Its 39% Premium Hike Demand After Audit Reveals Bad Math

Yesterday, Anthem's reported fiscal 2010 first quarter profit of 51% provoked U.S. Sen. Dianne Feinstein, D-CA, to call on the company to forget the 39% hike.

Feinstein said in a release that the profits were evidence WellPoint is not hiking up rates on customers due to economic need, as the company claims, but as part of a coordinated strategy to drive up corporate profits.

And, she noted, the profit increase came two weeks after news reports revealed that WellPoint CEO and President Angela F. Braly received a 51% increase in her compensation last year.

Earlier this year, Feinstein had tried to amend the health reform bill to include a stringent process for health companies seeking rate hikes of a certain amount to be required to produce documentation for review, and be approved.

And yesterday several consumer groups again took up that chant.

"Oversight matters," said Anthony Wright, executive director of Health Access California. "But more than rate relief, this withdrawal of the rate hike proposals show why we need regulators to have active oversight over the insurance industry."

Wright added that Poizner's audit, done under existing law "was very limited, and it was still able to find basic problems with arithmetic and double-counting."

A bill now being considered in the California Legislature would require HMOs and health insurers to seek prior approval for rate increases and justify overhead costs, just like companies providing auto and other kinds of insurance already have to do under California's Proposition 103.