Feinstein Pressures WellPoint To Abandon Premium Hike Plans
On Wednesday, Sen. Dianne Feinstein (D-Calif.) urged WellPoint to cancel its plans to raise premiums by up to 39% for individual Anthem Blue Cross of California policyholders, in light of WellPoint's latest profits, the San Francisco Chronicle reports. WellPoint is the parent company of Anthem.
According to Feinstein, the company's earnings show that the rate hikes were proposed not out of economic necessity but as part of a strategy to increase profits. "WellPoint's actions are a textbook example of the profits-above-all-else Wall Street mentality that has caused major hardship for millions of Americans," she said.
Feinstein and Sen. Barbara Boxer (D-Calif.) have introduced legislation (S 3078) that would empower the HHS secretary to review and reject unfair premium increases, the Chronicle reports.
Last week, WellPoint said it would delay the premium hikes that were scheduled to take effect on May 1 to provide the California Department of Insurance with more time to complete an audit by an independent actuary. WellPoint did not specify how long the delay would be (Colliver, San Francisco Chronicle, 4/29).
WellPoint Announces Rise in Profits
Also on Wednesday, WellPoint announced that its first-quarter profits rose 51% to $867.8 million, or $1.96 per share, compared with $580.4 million, or $1.16 per share, in the same period last year, the AP/Miami Herald reports.
WellPoint is the parent company for Blue Cross Blue Shield plans in 14 states and Unicare plans in several other states.
Excluding one-time expenditures, WellPoint said it earned $1.95 per share. First-quarter revenue declined to $15.1 billion this year, from $15.14 billion in last year's first quarter. Thomson Reuters had expected a profit of $1.67 per share and revenue of $14.72 billion.
According to WellPoint, the increase in profits was attributed to garnering more state-sponsored business, receiving greater reimbursements for some programs, spending less than expected on flu treatment and experiencing improved results from its standalone Medicare Part D programs.
Profits from WellPoint's consumer business increased by 49%, but revenue from it declined by about 1%, with premium revenue falling by 2% and other revenue dropping dramatically. According to WellPoint, it spent 81.8% of premium revenue on medical care -- down from 82.5% a year ago, counteracting a 2% decrease in enrollment.WellPoint is forecasting an average annual profit of $6 per share, while analysts expect a profit of $6.14 per share. The company also is forecasting enrollment to fall by 600,000 for a total enrollment of 33.1 million by the end of 2010 (AP/Miami Herald, 4/28). This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.