Company Execs Promised Patients Wouldn't Pay More, But Costs Are Increasing
Santa Monica, CA -- According to SEC documents filed yesterday, just five months after the company's $16 billion merger with Anthem, Blue Cross of California's parent company, WellPoint Inc., will pay its president $1.25 million this year - a 15.5% increase over 2004 - while California patients receive rate increases and benefit reductions like higher co-pays and deductibles. In the merger agreement, company executives promised that California patients would not see higher rates because of the merger however patient premiums are on the rise, according to the Foundation for Taxpayer and Consumer Rights (FTCR).
"HMO executives promised California patients that they would not pay the price of this merger, but while executive salaries and bonuses go through the roof, Blue Cross enrollees are receiving rate increases and benefit reductions in the mail," said Jerry Flanagan of FTCR. "State regulators should investigate the Blue Cross premium increases and force the company to refund overcharges brought on by an explosion of executive salaries and bonuses."
Through Public Records Act requests of confidential documents filed with state regulators, FTCR was first to uncover details of up to $600 million in cash and stock bonuses for top executives included in the merger deal. FTCR called on state regulators to require the companies to reduce the size of the executive payouts. Instead, state regulators required the new company to invest a sum of money equal to the total amount of executive bonuses in low-income communities. Regulators also won guarantees from company executives that Blue Cross contracts would not change and patients would pay for the merger in the form higher rates -- both of which appear to be happening.
In addition to the $1.25 million salary, WellPoint CEO Larry Glasscock will receive a stock award worth $3 million and could receive a bonus of up to $3.75 million if the company exceeds performance goals.
The next highest paid WellPoint executive, David C. Colby, will receive a salary of $675,000 in 2005, an 85% increase over 2004, and a stock award worth $975,000. Three other executives, Keith Faller, David Helwig, and Thomas Snead will receive a combined salary of $1.88 million, representing an 80% increase over 2004 salary totals, and a combined stock award of $2.7 million. The SEC filing is available at: http://ir.wellpoint.com/phoenix.zhtml?c=130104&p=irol-sec
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The Foundation for Taxpayer and Consumer Rights (FTCR) is California's leading nonpartisan consumer advocacy organization. For more information, visit us on the web at http://www.ConsumerWatchdog.org