WellPoint Goes On The Offensive

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As the debate over how to reform the nation’s costly and complex health-care system heats up in Congress, Indianapolis-based health insurance giant WellPoint is on the offensive.

"What our goal is, is to make sure we fix what’s broken but leave in place what works," WellPoint Chief Executive Officer Angela Braly told Indianapolis Star journalists during a recent meeting on health-care reform.

"We’re feeling really good about where it’s going," she added.

Braly sees the innovations and efficiencies spurred on by the private market,which includes the $61 billion company she heads, as a big part of what works in U.S. health care.

But with huge portions of its profit and revenue potentially on the line as Congress and President Barack Obama take up health-care reform, WellPoint is busy making its case.

The company opposes a public plan, such as Medicare, that would be open to all Americans and would compete with private insurers such as WellPoint. It’s an approach that was backed by Obama during last year’s campaign.

To get out its message:

WellPoint spent $1.22 million lobbying the federal government in the first quarter of 2009 to see its position on health reform and other issues was heard, according to disclosure forms. That’s a 16 percent increase from its lobbying
spending in the same period a year ago.

Last week, the WellPoint Institute of Health Care Knowledge, a unit of the company launched about a year ago, released a report "dispelling the notion that insurer profits are fueling spiking costs." Instead, the report points to factors including advances in medical technology, price inflation for services and lifestyle factors such as obesity.

When it comes to reforms in health- care coverage, WellPoint is touting the idea of expanding the individual insurance market as the way to provide coverage to the estimated 46 million Americans who are uninsured.

WellPoint, with about 35 million members, and other insurers would drop their longstanding practice of excluding people with pre-existing conditions. In return, the government would require that everyone buy insurance and provide subsidies for those below certain income levels.

Obama said health care must at least be affordable, provide quality coverage for all Americans, and reduce the long-term growth of costs for businesses and government.

Multiple options

The Senate Finance Committee, chaired by Sen. Max Baucus, D-Mont., this spring released three reports, totaling 156 pages, spelling out the many variations health-care reform could take.

One possibility is the creation of an Internet-based health insurance exchange where consumers could easily review all plans available in their ZIP codes. Another proposal is a public health insurance plan, administered by the government, that would compete with for-profit insurers such as WellPoint.

Proposals to finance reform abound: One would look at changing or limiting the tax-free status of money paid for employer-sponsored health plans. Others would tax alcohol or sugar-sweetened beverages — so-called "sin" taxes.

"There are clearly a lot of outstanding issues that need to be resolved," said Jennifer Tolbert, a principal policy analyst at the Kaiser Family Foundation, a nonprofit health-care researcher based in California. "There’s a lot in this (potential) legislation."

The possibility of a public-plan option is of particular concern to commercial health insurers such as WellPoint.

"We think there are some real concerns there with trying to have a level playing field when government comes in and competes with you," said Braly. She said that up to 130 million people could migrate into such a plan if offered.

That, she said, would prompt commercial plans to pass on higher costs to members to make up for what tend to be lower reimbursement rates paid by government programs.

Tolbert said the public-plan option appears to enjoy support in the House. "It’s unclear what the support is in the Senate," she said.

Difference of opinion

The recent report from the WellPoint Institute of Health Care Knowledge takes aim at those who blame skyrocketing health-care costs on insurers. The report, which cites research from PricewaterhouseCoopers, states that just 3 cents of every health-care dollar goes for insurers’ profits.

Industry critics, however, see the report as yet another example of public-relations spin by Big Insurance designed to squash the public-plan option.

"They’ll lose dollars and people if the public-plan option that the president wants becomes a reality," said Jerry Flanagan, health-care policy director with Consumer Watchdog, a California-based advocacy group. "The general public doesn’t put much credence into a poll like this."

Over the past five years, WellPoint has made profit of $12.4 billion on revenue of about $245.4 billion — a margin of about 5 percent, according to company filings.

Flanagan said Americans allowed to enroll in a competing public plan would benefit from Medicare’s low administrative expenses of about 3 percent.

Commercial insurers such as WellPoint, he said, have overhead rates running from 5 percent of premiums for self-insured large companies to 40 percent for individual insurance.

Dr. Samuel Nussbaum, WellPoint’s chief medical officer, has a response for such criticism.

WellPoint’s administrative costs, he said, include services for patients to improve care such as 24-hour nurse lines, and care coordination for those with chronic diseases.

"If you talk to seniors (on Medicare) who have multiple chronic illnesses, they’re on their own," Nussbaum said.

He echoed Braly’s message on reform: "The private sector has solutions today."

Call Star reporter Daniel Lee at (317) 444-6311.

Consumer Watchdog
Consumer Watchdoghttps://consumerwatchdog.org
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