Santa Monica, CA – The former CEO of Wellpoint, Angela Braly, was paid $20 million after resigning under pressure last year, news that broke the day after the insurer’s California subsidiary, Anthem Blue Cross, was taken to task for raising rates unreasonably for thousands of California small businesses.
 
The development highlights the need for public scrutiny of health insurance prices, when insurers are claiming poverty yet continue to pay excessive executive salaries and take in enormous profits, said Consumer Watchdog.
 
“Angela Braly’s $20 million payout gives the public 20 million reasons to demand oversight of the unreasonable premiums health insurance companies charge. Consumers and small businesses shouldn’t have to pay excessive premiums to fund outrageous eight-figure executive salaries, but that’s what’s happening in California because health insurance companies don’t have to justify and get approval for rate hikes,” said Carmen Balber, executive director of Consumer Watchdog.
 
California Insurance Commissioner Dave Jones announced yesterday that Anthem’s 10.5% April 1 rate hike on small business customers was unreasonable, but he could not stop it because of a loophole in California law. Working with an independent actuary, the nonprofit, nonpartisan Consumer Watchdog analyzed the data in Anthem’s rate filing and found the company should be lowering average annual premiums by about $17 million for the 7,000 businesses affected by the rate hike. Health insurance companies complained that state regulators and consumer groups are applying too much scrutiny to health insurance rate proposals.
 
Consumer Watchdog’s actuary, AIS Risk Consultants, found that Anthem’s projections of medical spending and anticipated profits were excessive. In seven of the last eight years, Anthem had a return on net worth of more than 20% and reported $2.1 billion in income from its health insurance business in California.
 
Anthem has imposed repeated unreasonable rate increases on hundreds of thousands of small businesses and individuals in California over the last several years, with no consequences. In January the health insurance company imposed an unreasonable rate hike on another 250,000 small business employees. Anthem imposed an unreasonable rate hike on 120,000 Californians with individual policies in 2011. Blue Shield and Aetna were also found to have imposed unreasonable rate hikes on their customers this year.
 
An initiative measure on the ballot next year will let voters decide whether to require health insurance companies to publicly justify and get approval for rate increases before they take effect. The measure is modeled on existing California law that regulates auto, home and other insurance lines and has saved drivers $62 billion, according to the Consumer Federation of America.
 
– 30 –
 
Visit our website at: http://www.ConsumerWatchdog.org