WellPoint Press Conference April 7, 2010

The press conference outside WellPoint headquarters in downtown Indianapolis was a tremendous success.  See the HCHP website for media coverage, including TV.  Here is the text of Dr Stone’s statement:

People ask me, why should WellPoint shareholders vote for the proposal that the company explore returning to its traditional Blue Cross, charitable, not-for-profit mission?

The reasons keep coming out in the newspapers, and let me mention a few from the last 12 weeks.

The Indianapolis Star on January 16 exposed that WellPoint has been covertly funding U.S. Chamber of Commerce attack ads against health care reform.  WellPoint spent tens of millions on other non-covert lobbying.  Keep in mind that the bill recently passed was largely written by former WellPoint Vice President Liz Fowler in her role as Max Baucus’ chief healthcare legislative aide.

McClatchy Newspapers on February 24:  ”While Anthem Blue Cross proposed a 39 percent rate increase on thousands of its California customers, its parent company gave 39 of its executives more than $1 million each and spent more than $27 million on 103 lavish executive retreats, congressional investigators said.”

The Los Angeles Times on March 10 updated its readers on the ongoing rescission scandal involving WellPoint in California. “Only a small fraction of eligible Californians have benefited from agreements that Anthem Blue Cross made to settle accusations that they systematically and illegally dropped sick policyholders to avoid paying for their care.”  These were people whose insurance coverage was cancelled after they were diagnosed with cancer and other serious conditions.

The Los Angeles Times again, on March 18 reported that in 2007 WellPoint had pledged through its charitable foundation to spend $30 million over three years to help those lacking health coverage, but its tax records and website show it gave only $6.2 million.

Consumer Watchdog reported March 31 that WellPoint sent a message to investors describing how it would simply re-label administrative costs as “medical care” in response to the new health reform law. The message follows revelations that WellPoint, also intentionally padded already huge premium increases in California, just in case regulators demanded reductions.

Also on March 31, Revive Public Relations released the results of its fourth annual national payer survey of hospital executives. Survey results showed a marked decline in WellPoint/Anthem’s reputation, now 2nd worst of all health insurance companies in their study.

And now this week the news of CEO Angela Braly’s 51% salary increase, up to $13.1 million.  The arrogance is overwhelming.  Why wouldn’t shareholders be concerned with the direction this company is heading?

Yesterday afternoon in Bloomington I listened to Allan Hubbard speak on health care reform at Indiana University.  Mr Hubbard, an Indianapolis businessman, served in the GW Bush administration and is a recent member of WellPoint’s Board of Directors.

He made no bones about being a Republican and shared a Republican view on where health care reform should go from here.  At the end of his talk he concluded with this prediction: “My guess is that in 15 years we will have a single payer health plan, Medicare for All.”  He wasn’t saying that gleefully.

He explained that all the health insurance companies do is serve as middlemen between patients and providers, (doctors and hospitals).  He fears that as health care reform moves forward, Congress and the people will turn on them as a way to cut spending.

They (we) should.  The health insurance industry adds huge administrative costs to our system, not to mention the profits they siphon off.  WellPoint is a parasitic middleman that adds no value, but actually increases the cost of healthcare for all of us.

I see the day when socially responsible investors will divest themselves from health insurers’ stocks.

My recommendation is that WellPoint investors look at drastically changing the direction of our company, and not wait for the stock price to plummet once the public figures out that insurance companies should go.