WellPoint Defends Rate Hikes

WellPoint Inc. execs canceled their annual investor day this week so they could prepare for testimony before a Congressional committee in which they are defending proposed rate hikes. But it was remarks in a legislative hearing in California that made even more headlines Tuesday, as WellPoint officials predicted that their premium increases at the center of a national debate would be approved in that state.

California lawmakers flogged WellPoint execs in a hearing after the insurance officials justified premium increases proposed by subsidiary Anthem Blue Cross of as much as 39 percent and called company profit margins that range between 2.5 to 5 percent appropriate.

"Profits in the range of 2.5 percent to 5 percent are reasonable profits. They are appropriate profits. They are profits that we have as . . . a responsibility to keep a viable business surviving," Anthem President Leslie Margolin told the California lawmakers, according to the Los Angeles Times.

To which Assemblyman Dave Jones, a Sacramento Democrat and health committree chair, responded: "Have you no shame?"

Asked if Anthem plans to go ahead with its rate increases, James Oatman, WellPoint's vice president and general manager of individual business, is quoted by the Times saying: "We believe the rate increase we have applied for is consistent with all the laws of the state of California. We are advocating that those rates are appropriate rates."

This morning, WellPoint officials are taking a turn before the House Energy and Commerce Subcommittee on Oversight and Investigations in Washington. The politicians have seized on this issue with President Obama even making insurance rates a centerpiece of his revised health reform plan. Expect more political theater.