Big insurer slammed on exec pay and rate hikes

A version of this story appeared in Newsday Thursday, Feb. 25, 2010

WASHINGTON - A major health insurer that wants to boost rates in California by up to 39 percent was trying to maximize profits by purging its sickest customers while spending millions on exorbitant salaries and retreats for its executives, congressional Democrats said Wednesday.

Rep. Henry Waxman (D-Calif.), chairman of the House Energy and Commerce Committee, said at a hearing on WellPoint Inc. that his panel's investigators had received internal company documents showing that in 2008, 39 company executives received salaries of $1 million or more. And in 2007 and 2008, it spent $27 million for 103 executive retreats, which Democrats said included stays at resorts in Hawaii and Arizona.

"Corporate executives at WellPoint are thriving, but its policyholders are paying the price," said Waxman (D-Calif.).

WellPoint owns Anthem Blue Cross, which wants to raise rates on individual policyholders in California and blames those increases on rising medical costs. During a break in the hearing, a WellPoint executive said eliminating the executive salaries and retreats would have no impact on its rates.

"What's driving these rate increases are the underlying medical costs," said Brad Fluegel, WellPoint's chief strategy officer. He also said some of the retreats were for insurance agents and brokers who sell the company's products.

Anthem's rate boosts in California have made it a poster child for Democrats arguing that the nation's health system must be overhauled.

Later Wednesday, the House voted overwhelmingly to repeal the health insurance industry's exemption from federal antitrust oversight, giving Democrats an easy win on health care a day ahead of President Barack Obama's bipartisan health summit. The vote was 406-19.

And Health and Human Services Secretary Kathleen Sebelius wrote to the heads of five major insurance companies asking them to meet with her to justify their pricing policies.

The moves were more symbolic than substantive, but together they underscored how Democrats view attacks on the widely disliked health insurance industry as one way to revive support for their health care drive, both with the public and among their own lawmakers, who have so far failed to rally behind a bill that Congress could send Obama.

A CAUSTIC EXCHANGE

A company president and a congresswoman debated the merits of WellPoint insurance premium hikes of up to 39 percent.

Rep. Jan Schakowsky (D-Ill.) called WellPoint's premium increases "so incredibly audacious, so irresponsible" and asked company president Angela Braly what she earned last year. Braly said she had a $1.1-million salary, and stock compensation worth $8.5 million.

"Of course it makes sense that you would need a big rate increase," Schakowsky said.

Braly blamed the increases on the growing costs of hospital care and pharmaceuticals and on the ailing economy.