Santa Monica, CA -- WellPoint's huge profit increase reported today provides additional urgency to investigations under way by California regulators to determine whether WellPoint's California company, Blue Cross, broke promises to not pass on merger related expenses to patients, according to the Foundation for Taxpayer and Consumer Rights (FTCR).
Last week, FTCR launched a new Internet campaign complete with flash video animation targeting excessive health insurance costs in the wake of WellPoint's merger with Anthem which awarded top executives hundreds of millions of dollars in bonuses. To watch the animation visit: http://www.consumerwatchdog.org/healthcare/PigPeople
"WellPoint and Blue Cross of California are piggish insurers that divert huge amounts of money to overhead and profit, leaving patients to foot the bill. Though Blue Cross promised to not charge patients for hundreds of millions of dollars in executive bonuses, huge profit increases suggest that the company is playing a shell game with our money. Investigations by regulators must determine if merger costs paid by patients have been used to subsidize profit increases," said Jerry Flanagan of the Foundation for Taxpayer and Consumer Rights (FTCR). "WellPoint and Blue Cross' real allegiance is to their Wall Street masters who demand more for themselves and less for patients."
WellPoint reported post-merger net income today that is twice as much as that recorded during the same period last year: $559.4 million compared to $237.9 million. Revenue rose from $4.61 billion to $11.3 billion. According to WellPoint, administrative costs accounted for 16.5% of revenue. Blue Cross of California spends roughly 20% of premium revenue on overhead costs, not including reserves of approximately $1.4 billion.
The animation, entitled "Pig People from Outer Space (PPOs)," shows PPOs, HMOs and other health insurers as money hungry aliens that will stop at nothing to gouge unsuspecting business owners, leaving patients uninsured.
FTCR is now collecting signatures on an Internet petition urging Governor Schwarzenegger, Insurance Commissioner Garamendi, and the State Legislature to crack down on insurance company greed by regulating health insurance premiums in the same manner as auto and home insurance premiums under Prop 103. Prop 103, which requires insurers to justify rate increases and bans excessive and unfair rates, has saved California drivers $23 billion since 1988.
According to SEC documents and filings made with the California Department of Managed Health Care ("DMHC"), Leonard Schaeffer will receive $250 million dollars in cash and stock as a result of the recent merger between WellPoint, parent company of Blue Cross of California, and Anthem Inc. The DMHC is currently investigating whether Blue Cross of California and WellPoint executives broke promises they made to state regulators to not raise premiums in order to pay for merger-related costs and executive bonuses.
For more information regarding the WellPoint/Anthem merger, go to: http://www.consumerwatchdog.org/healthcare/healthcosts/
The Foundation for Taxpayer and Consumer Rights (FTCR) is California's leading nonpartisan consumer advocacy organization.