Today, during a hearing before the House Energy and Commerce Health Subcommittee, Reps. Bart Stupak (D-MI) and Henry Waxman (D-CA) questioned WellPoint CEO Angela Braly about the company's proposed rate increases in California's individual health insurance market. The congressmen read from a series of internal company emails which revealed that WellPoint was rising premiums simply to increase its profits:
– "The average increase is 23 percent and is intended to return California to a target profits of 7 percent, versus 5 percent this year." [WellPoint email, October 7, 2009]
– "We're asking for premiums that would put us $40 million favorable…if we get the increases on time, we will see an opt gain upside of $30 million downgrades and rate cap." [WellPoint email, November 2, 2009]
– "[W]e needed to reach agreement on filing strategy quickly — specifically in the area of do we file wth a cushion allowed for negotiations." [WellPoint email, 10/24/2009]
Watch a compilation: http://www.youtube.com/watch?v=LjEV9iMNIEk
WellPoint acknowledged setting its increases to keep up with medical costs and maintain a 2% profit, but justified the increases by arguing that the company lost money in the individual market in California. "I don't mind you making a profit but at the end of the year, 2009 a horrible year, you still made 2 point something billion dollars, and that's not enough," Stupak remarked, noting that WellPoint's high profit margin is the reason "many of us believe in a public option." The Wonk Room has more.
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