WellPoint Accused of Manipulating Data to Bolster Profit

WellPoint Inc. may have manipulated claims payout data to make its case for higher premiums in California because it aimed to bolster profit in the state.

Those assertions were made by Rep. Henry Waxman, who cited company documents, as WellPoint faced fire from an investigative subcomittee of the congressman's House Energy and Commerce Committee today.

The insurer's Anthem Blue Cross subsidiary is asking for individual rate increases of as much as 39 percent in California, a request that's drawn considerable national attention and negative publicity for the company. WellPoint insists it isn't trying to jack profits and is simply passing along higher medical costs, but Waxman refuted that statement, saying internal documents and e-mails suggest otherwise. The California Democrat cited lavish company retreats and large bonuses for top execs to argue that the company was profiting handsomely.

Separately, an independent analysis by a liberal think tank reports that California isn't the only place where WellPoint is raising premiums by large percentages. The insurer is raising rates on individuals by double-digit percentages in at least 10 other states, according to the Center for American Progress Action Fund. In addition to California, WellPoint recently raised or is proposing to raise premiums in Colorado, Connecticut, Georgia, Indiana, Maine, Nevada, New Hampshire, New York, Virginia, and Wisconsin. WellPoint operates in three other states: Ohio, where a state law is contributing to lower rates; Kentucy, where rates increased 3 percent last July; and Missouri, which doesn't provide insurance rate data.

To be sure, other insurance companies are raising premiums but WellPoint is the one caught in the crosshairs. The company has become the face of insurance industry greed, providing Democratic politicians with the ammo they need as they push for President Obama's second-wind health reform effort. Indeed, the president made insurance premium increases a centerpiece of his revised plan.

"One question we asked is where does all of this money go," Waxman said. "We have learned that in 2008, WellPoint paid 39 senior executives over $1 million each. And the company spent tens of millions of dollars more on expensive corporate retreats. During 2007 and 2008, WellPoint spent $27 million on 103 executive retreats. One retreat in Scottsdale, Arizona cost over $3 million."

And he didn't stop there: "Corporate executives at WellPoint are thriving, but its policyholders are paying the price," Waxman adds. "Health insurers like WellPoint may get richer, but our nation’s health will suffer. We cannot go down this road forever. It is breaking our middle class. And it will bankrupt our nation."

Sure, he's laying it on thick but someone needs to be a villian in this saga. WellPoint is filling the role nicely.

"I was very disappointed to see the health reform debate change from one of possible change and productive results to an attack on the health insurance industry, specifically pointing to our profits and citing this as the primary reason for premium increases, which is very misleading," WellPoint CEO Angela Braly told the House committee.

She must be even more disappointed that her company became the primary target.