Democratic Sen. Dianne Feinstein of California called on WellPoint Inc. to drop plans for premium pay hikes of as much as 39% on policyholders in her state after the health insurer reported a Fiscal 2010 first quarter profit increase of 51%.
Indianapolis-based WellPoint reported a net income of $876.8 million, or $1.96 per share, with total revenues of $15.1 billion, as profits from its consumer segment increased by 49%, to $326 million. WellPoint credited the solid quarter on enrollment growth of 0.5% and lower benefit expenses, owing to the relatively mild flu season.
"We are pleased with our membership growth in the first quarter, which was higher than we anticipated. We have grown significantly in the National Accounts market this year, reflecting that large customers continue to be attracted to WellPoint's broad and cost-effective provider networks, leading products and initiatives, and reliable customer service," WellPoint CEO/ President Angela F. Braly said in the profits report.
Feinstein said in a media release that the profits were evidence that 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. Feinstein noted that WellPoint's profit increase came two weeks after news reports revealed that Braly received a 51% increase in her compensation last year.
"At a time when so many Americans are struggling to make ends meet in a tough economy, WellPoint is reaping a 51% increase in profits while simultaneously raising premium rates on hardworking California families by up to 39%. This is unconscionable," Feinstein said. "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."
WellPoint Inc. is the parent company of Anthem Blue Cross of California, which announced plans in February—in the middle of the national debate on healthcare reform—to impose rate hikes of up to 39% on 800,000 policyholders. The company has twice delayed the rate hikes because of sharp criticism.
"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," Feinstein said.
Feinstein has introduced the Health Insurance Rate Authority Act of 2010, which would empower Health and Human Services to review and reject unfair premium rate increases. Rep. Jan Schakowsky (D-IL) has introduced a companion bill in the House.
John Commins is the news editor for HealthLeaders.