FEINSTEIN BLASTS WELLPOINT CORPORATE GREED, INTRODUCES BILL TO HALT RATE INCREASE ON 800,000 CALIFORNIANS

Printer-friendly versionPrinter-friendly version Share this

Insurer also targeted breast cancer patients with computer program to terminate their coverage


April 27, 2010 (Washington, DC) – U.S. Senator Dianne Feinstein (D-CA) expressed outrage after Reuters published a story detailing how WellPoint Inc. used a special computer program to target breast cancer patients and terminate their health coverage. (Read the story here.) WellPoint is the parent company of Anthem Blue Cross of California, which plans to hike premium rates by up to 39 percent on 800,000 California policyholders on May 1.

"We have a duty to protect the American people from the corporate greed of these for-profit, publically traded health insurance companies," said Senator Feinstein. "If a CEO thinks it is okay to deprive women of their health coverage when they become seriously ill with breast cancer, we can't trust them to do the right thing, period. Left to their own devices, companies like WellPoint will throw paying customers to the sharks for the sake of profit."

Senator Feinstein has introduced the Health Insurance Rate Authority Act of 2010, which would empower the U.S. Secretary of Health and Human Services to review and reject unfair premium rate increases. The bill is co-sponsored by Senators Barbara Boxer (D-CA), Kirsten Gillibrand (D-NY), Jack Reed (D-RI), Bernard Sanders (I-VT) and Sheldon Whitehouse (D-RI). Rep. Jan Schakowsky (D-Ill.) has introduced a companion bill in the House of Representatives. In today's remarks, Senator Feinstein announced that she may soon offer the legislation as an amendment to a must-pass bill.

 

According to an investigation by the House Committee on Commerce and Energy, WellPoint raked in $128 million in profits by terminating the health insurance policies of sick Americans, a practice known as "rescission."

The health insurance reform bill recently passed by Congress and signed by President Obama prohibits the practice of rescission. Feinstein called for strong enforcement of the new law so that companies won't find creative ways to continue this unconscionable practice.

 

"We must clearly be vigilant in order to assure that the law has teeth and is heavily enforced," she said. "We can't turn our backs for one minute."

 

The California Senator also called for Congress to take urgent action to close the Rate Hike Loophole that will allow health insurance corporations to dramatically hike premium rates between now and 2014, when health insurance exchanges go online.

 

"If there was any doubt about whether corporate greed has anything to do with WellPoint's plans to jack up premium rates on its customers, I think today's Reuters story answers the question definitively," said Feinstein. "It's time for Congress to step in and fix the rate hike loophole in the health insurance reform law. We must put patients before profits, and protect the American people from this kind of unchecked greed."

 

In a statement on the Senate floor, Feinstein gave examples of how women under attack by both cancer and WellPoint were reportedly left ailing, disabled, and broke:

 

“Yenny Hsu, a woman from Los Angeles, was kicked off of her insurance policy after a breast cancer diagnosis because WellPoint said she failed to disclose that she had been exposed to hepatitis B as a child. Now, that has nothing to do with breast cancer, but it did not stop WellPoint from terminating her coverage,” Feinstein said.

“Another loyal, paying WellPoint customer who faced this situation was Patricia Reilling of Louisville, Kentucky. Ms. Reilling was an interior designer and art gallery owner who never missed a payment. But that did not stop WellPoint from canceling her insurance in the middle of her fight with breast cancer. WellPoint abandoned her at her weakest moment, forcing her to pay enormous medical bills on her own. This woman, who was once a highly successful business owner, is now subsisting on Social Security and food stamps,” Feinstein revealed.

Meanwhile, WellPoint made a profit of $128 million by stripping seriously ill Americans of their insurance coverage in this manner, according to the House Energy and Commerce Committee. This is likely a low estimate because WellPoint refuses to provide a total number for rescissions across the company's subsidiaries.

WellPoint earned a $4.7 billion profit in 2009 -- a $4.7 billion profit in 1 year. Angela Braly, the CEO of WellPoint, received $13.1 million in total compensation in 2009. This was a 51-percent increase in her salary over the prior year.

WellPoint is not alone in doing this to people, but they are an egregious offender. According to the House Energy and Commerce Committee:

WellPoint and two of the nation's other largest insurance companies -- UnitedHealth Group Inc and Assurant Health, part of Assurant Inc -- made at least $300 million by improperly rescinding more than 19,000 policyholders over one five-year period.

According to Health Care for America Now, these large companies -- the big, for-profit American medical insurance companies -- have seen their profits jump 428 percent from 2000 to 2007. All during this period, they have doubled premium costs. So they have made huge profits in seven years, and they doubled premium costs.

Feinstein noted the health insurance reform law passed by Congress and signed by President Obama will end the practice of rescission and discrimination because of preexisting conditions. But Congress must be vigilant to assure that the law “has teeth and is heavily enforced,” she noted.

 

“We cannot turn our backs for one minute because, left to their own devices, I truly believe these companies will look for ways to throw paying customers to the sharks for the sake of profit. These are strong words, and I am not known for such strong words,” she said. “But the more I look into the large, for-profit medical insurance industry of the United States, the more I am embarrassed by it.

The Senator said she has received letters from hundreds, if not thousands, of Californians whose lives will be devastated by these rate increases at a time when 2.3 million Californians (12.7%) are unemployed and many have lost homes to foreclosures. Many have already faced prior hefty rate hikes. Two million Californians have gone off health insurance in the last two years, she said.

“These are families with children. They are students and the elderly. One woman had been a client of Anthem for 30 years. She had never been sick, and she got sick. Cancer survivors, small business owners, they are about to be crushed.

WellPoint will tell us that these premium rate hikes cannot be avoided. They will tell us that others are to blame: hospital charges, prescription drug prices, the rising cost of medical care. They blame the government. They blame the economy. But the fact is that they are making money, and billions of dollars of money.”

Feinstein’s bill aims to prevent unfair premium rate hikes by establishing a health insurance rate authority. It would give the Secretary of Health the mandate to see that rates are reasonable—and power to block rate hikes deemed unreasonable or order rebates.

On April 20, the HELP Committee held a hearing on this bill. The chairman of the committee, Senator Harkin, made some very strong statements in favor of it, as did other Democrats. The Republicans who spoke opposed it.

 

 The proposal would create a rate authority, a seven-member advisory board to assist the Secretary. A wide range of interests would be represented: consumers, the insurance industry, medical practitioners, and other experts.

 

 “If these companies were having a hard time, I would say: Look, it can't be helped. But they are not. They have enjoyed something no other American business has, and that is an antitrust exemption,” Feinstein observed, noting that only Major League Baseball has an antitrust exemption. “So they are able to go all over the country and merge and acquire insurance companies in order to control market share. Once they control market share, they then begin to boost rates.” Over the past 7 years of doing this, they have developed a 428 percent increase in their bottom line, which is their profits, she said.

“If a CEO thinks it is OK to deprive women of their health coverage when they become seriously ill with breast cancer, we can't trust them to do the right thing, period,” Feinstein concluded. “This ought to be convincing to every Member of this body, whether it is this side of the aisle or the other side of the aisle…We have to put patients before profits.”

 

Feinstein said she would will likely attempt to offer the language as amendment to the regulatory reform bill to halt the May 1st rate hikes.

“I would implore WellPoint and Anthem to understand, and to not raise these rates,” she added in a pointed message to the insurers. “They have postponed this rate increase once before; they certainly can do it again.”

 

WellPoint’s top executive is being called to testify before a House committee next week about the company's rate hike.

 

America's Health Insurance Plans, an industry trade group, said Feinstein's plan would add an unneeded layer of regulation, the San Jose Mercury News reported. "It's an effort in Washington to shift the focus to the insurance industry," spokesman Robert Zirkelbach said, "rather than the real issue of soaring costs of medical care."

 

But a key consumer advocate called Feinstein's plan a step in the right direction.

 

"It's needed and appropriate for the federal government to provide a backstop when states can't or won't stand up to insurance companies," said Jerry Flanagan, a health care advocate with Consumer Watchdog.
 

Comments

wow

I'm both stupefied and amazed by these actions! Canceling health coverage for anyone is a clear violation of the human rights bill, but canceling it for a cancer patient is more than that! It's something unimaginable! I am even more surprised that WellPoint Inc. was involved in something like this! I had a couple of collaborations with this company in the development of several computer programs, I was even entrusted with checking most of their server exe files, so you could say we had a good relationship. I really liked those guys! They were all so nice and seemed to have very solid working ethic! I only hope the authorities will take action to stop these almost criminal actions!