Los Angeles Times Examines WellPoint’s Six-Year Recovery, Expansion
The Los Angeles Times yesterday profiled Thousand Oaks-based WellPoint Health Network's six-year expansion, which began with the "embarrassing failure" of its plan to merge with Health Net and now sees the company on the brink of having the nation's third-largest enrollment among publicly traded managed care companies. On Dec. 29, 1995, the day WellPoint's merger with Health Systems International died, the company's stock stood at $32.13. It closed Friday at $120, a nearly 400% rise that Wall Street analysts say is partly the result of its "heav[y]" investment in electronic upgrades and computer systems that "not only provide doctors and patients with better warnings about drug interactions but also help it predict cost and market trends." Greg Crawford, an analyst with Fox-Pitt, Kelton Inc. in San Francisco, said, "They're only a step or two away now from a good platform for a true national health care company that can compete with the major players." The company's California membership has increased by 373,000, or 9.5%, and this year it moved to purchase Georgia-based Cerulean Co., Missouri-based Right Choice Managed Care Inc. and CareFirst BlueCross BlueShield in the mid-Atlantic for a total of $3.1 billion to $3.3 billion. If all three mergers prove successful, WellPoint's membership will grow to about 16 million in less than two years. WellPoint, the parent company of Blue Cross of California, has also avoided the lawsuits filed against other national MCOs, such as Aetna and Cigna, over patient care and billing practices. WellPoint Chair and CEO Leonard Schaeffer said, "When we went public, we said we would grow by 15% a year at a time when others were growing at 40% to 50% a year. Now, those others have hit a wall."
Consumer advocates, however, say the company's rise has come at patients' expense in the form of steep premium increases and reduced care. "They're profiteers, commercial barons, and they're upfront about it. That's what's so disgusting," Jamie Court, executive director of the Foundation for Taxpayer and Consumer Rights, said. The Times reports that WellPoint "isn't soft on health plan customers," as it "expects [them] to shoulder higher costs" for expensive prescription drugs and those that are not recommended. The company also "has a history of keeping premiums high enough to stay ahead of medical costs." But Schaeffer said that premium increases were simply a reflection of the current state of health care. "Our premiums are going up because the underlying health care costs are going up," he said (White, Los Angeles Times, 12/9).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.