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Waxman and Stupak to WellPoint: We Request Your Testimony

February 9, 2010

As the Gavel noted last week, the Los Angeles Times reported that Californians who have purchased individual health insurance policies with Anthem Blue Cross and Blue Shield can expect to see their premiums increase between 30% and 39% this year alone. Adding insult to injury, Anthem Blue Cross and Blue Shield also announced they are changing their practice of adjusting the rates on an annual basis and now reserve the right to adjust the premiums more frequently.

Yesterday, Health and Human Services Secretary Sebelius called on Anthem Blue Cross to publicly justify its decision to raise premiums, writing:

One of the biggest pressures facing families, businesses and governments at every level are skyrocketing health insurance costs. With so many families already affected by rising costs, I was very disturbed to learn through media accounts that Anthem Blue Cross plans to raise premiums for its California customers by as much as 39 percent. These extraordinary increases are up to 15 times faster than inflation and threaten to make health care unaffordable for hundreds of thousands of Californians, many of whom are already struggling to make ends meet in a difficult economy.

Your company’s strong financial position makes these rate increases even more difficult to understand. As you know, your parent company, WellPoint Incorporated, has seen its profits soar, earning $2.7 billion in the last quarter of 2009 alone.

As Secretary Sebelius pointed out, WellPoint reported a staggering $2,740,000,000 in profits for the fourth quarter of 2009 alone — eight times more than the last quarter of 2008 — and more than $4,750,000,000 for all of 2009. In fact, the company reaped these record profits even as it lost more than 1.4 million members. Other health insurance company figures recently released show the same trend:

Health Insurance Company Profits

Today, Energy and Commerce Committee Chairman Henry Waxman and Subcommittee Chairman Bart Stupak announced that the Subcommittee on Oversight and Investigations will hold a hearing on February 24th regarding the premium rate increases. Their letter to Angela Braly, the President and CEO of WellPoint, requesting her testimony at the hearing as well as information and documentation from the company on its rate increases:

February 9, 2010

Ms. Angela F. Braly
President and Chief Executive Officer
WellPoint, Incorporated
120 Monument Circle
Indianapolis, IN 46204

Dear Ms. Braly:

The Committee on Energy and Commerce and its Subcommittee on Oversight and Investigations are investigating reports that Anthem Blue Cross is increasing its premium rates by as much as 39% in the individual health insurance market in California. Anthem Blue Cross is owned by WellPoint, Incorporated. The Subcommittee will hold a hearing on this issue on Wednesday, February 24, 2010, at 10:00 a.m. in Room 2123 of the Rayburn House Office Building. We request your testimony at this hearing.

To assist the Committee with the preparation for the hearing, we request that you provide the following information and documents:

1. All internal communications, including e-mail, to or from senior corporate management relating to the company's decision to increase premium rates in California in the individual health insurance market;

2. All presentations to senior corporate management, or government agencies, relating to increases in premium rates in California in the individual health insurance market;

3. A detailed explanation of the reasons for the premium rate increase proposed by Anthem Blue Cross in California;

4. For each year from 2005 to 2008, a table listing, as applicable, premium revenue, claims payments, sales expenses, other general or administrative expenses, and profits for all individual health insurance products, including an explanation of the methodology used for these calculations, for Anthem Blue Cross in California; and

5. A table listing all proposed premium increases from January 1, 2009, through December 31, 2010, in the individual health insurance market for all WellPoint subsidiaries, including the amount of the proposed premium increase, the subsidiary, the state affected, and a detailed explanation of reasons for the increase.

For purposes of this request, “senior corporate management” includes all company officials at the level of Vice President and above for Anthem Blue Cross and WellPoint, Incorporated.

Please produce the requested information by Friday, February 19, 2010. In addition, we ask that you advise the Committee by Friday, February 12, 2010, whether you will comply with this request on a voluntary basis. Attachments to this letter provide additional information about responding to Committee document requests and testifying before the Committee.

If you have any questions regarding this request, please contact Stacia Cardille with the Committee staff at (202) xxx-xxxx.


Henry A. Waxman

Bart Stupak
Subcommittee on Oversight and Investigations

As President Obama said today in relation to Anthem Blue Cross, “if we don’t act, this is just a preview of coming attractions. Premiums will continue to rise for folks with insurance; millions more will lose their coverage altogether; our deficits will continue to grow larger.” The need for health insurance reform could never be more clear.