Santa Monica, CA — The Proposition 45 campaign today said that WellPoint’s massive $731.1 million second quarter profit underscores the need for Proposition 45’s protections against health insurance price gouging.
The profit report comes a day after the California Insurance Commissioner reported steep health insurance rate hikes for Californians in 2014 and expressed frustration that no one has the ability to stop excessive rates. The Department of Insurance analysis found that individuals paid 22% – 88% more for health insurance in 2014 than in 2013. No agency in California or federally has the power to stop health insurance rate hikes by California health insurers.
Prop 45 will require health insurance companies to publicly disclose and justify, under penalty of perjury, proposed rate changes before they take effect, and require that they get approval for rate hikes. WellPoint has contributed $12.5 million of the $25 million raised to date against Proposition 45, which will shine a light on health insurer rate proposals and ensure reasonable rates and appropriate profits. Proposition 45 will apply the same laws to health insurance that ensure reasonable auto and property insurance rates in California and provide for reasonable profits.
“Californians are paying for WellPoint’s massive profits but, unlike in 35 other states, have no protections to ensure that the rates they pay are not excessive and unreasonable,” said Rob Leonard of the Yes on Prop 45 campaign. “Californians deserve to know that their rates are reasonable and not just a way to fatten the coffers of WellPoint and its shareholders.”
WellPoint’s report today acknowledged that its profits and future growth were also driven by increased enrollment in public exchanges, such as Covered California. Commissioner Jones noted that subsidies sometimes masked unreasonable rates because taxpayers, not policyholders, paid the price.
“Taxpayers and policyholders should have the benefit of Prop 45’s rate protections,” Leonard noted.
WellPoint’s report to investors today also included an expectation that small businesses will “migrate” to federal exchanges. This suggests that increased costs for small business plans outside the exchange will push small businesses to move to exchange plans which generally offer narrower networks of doctors and hospitals. The consequences could include patients losing access to existing providers, and increased co-pays and deductibles.
Consumer Watchdog Campaign noted that Proposition 45 will guarantee that unreasonable rate hikes don’t drive small businesses and individuals out of policies they want to keep.
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Paid for by Consumer Watchdog Campaign – Yes on 45, a coalition of consumer advocates, attorneys, policyholders, and nurses. 777 S. Figueroa St., Ste. 4050, Los Angeles, CA 90017. Major Funding by Consumer Watchdog Campaign and Thomas Steyer.