Executives from WellPoint Inc. and the Indiana Department of Insurance both received a grilling Wednesday morning before
the Committee on Insurance of the state House of Representatives.
The hearing was called by Committee Chair Rep. Craig Fry, D-Mishawaka, because WellPoint customers buying health coverage on their own will face on average price hike of 21 percent come March 1. Some will see rates spike as much as 34 percent, or, if they have entered a higher age bracket, even higher rates.
Fry and other lawmakers on the committee fired numerous questions at Doug Webber, Indiana's acting insurance commissioner, and at Rob Hillman, president of WellPoint’s Indiana subsidiary, Anthem Blue Cross and Blue Shield. The tiny committee room in the basement of the Indiana Statehouse was filled to standing-room capacity during the nearly two-hour hearing.
With TV news cameras rolling, Fry forced Hillman to defend those increases in light of WellPoint’s 2010 profits that topped $2.5 billion, not including the sale of a pharmacy business, as well as multimillion-dollar lobbying expenses and what Fry called “enormous salaries” for executives.
“I don’t know how you defend that kind of increase,” Fry said. “I understand you guys are in business to make money. … But people can’t afford your product.”
Hillman did defend the increases, blaming medical innovations for constantly driving up costs. On top of that, he said, increasing numbers of healthy people are dropping health insurance, leaving fewer dollars to cover the medical bills of unhealthy people who must keep coverage. That has forced WellPoint to raise rates even faster, he said.
Hillman downplayed the health insurance industry’s profits and executive pay, saying they represent little more than 2 percent of the premiums. But he agreed with Fry that continuing to raise premiums to keep ahead of rising medical costs puts WellPoint’s business in jeopardy.
“The affordability of health care is the biggest risk for our business,” he said, adding, “I firmly believe we are at a tipping point. We may be back here in six months because this problem is not going away. We are on a very bad path right now.”
Before sparring with Hillman, Fry zeroed in on Webber, particularly when the acting commissioner said the Indiana insurance department does not inquire what percentage of premiums Anthem takes as profit.
“Profits aren’t brought into consideration? How do you set rates if you don’t take everything into consideration?” Fry asked.
Webber said the insurance department verifies that Anthem spends at least 55 percent of premiums on medical care, but does not require an accounting of the other 45 percent.
Webber and his chief deputy, Robyn Crosson, emphasized that the Indiana insurance department hires an independent actuary to review each premium increase requested by Anthem—something that the state of California is only now doing to investigate WellPoint’s 25-percent increase in that state.
But Fry objected that the review is done by only one person—and any pushback against Anthem happens behind closed doors. He would prefer an open hearing.
“Wouldn’t that be appropriate when you’re dealing with people’s money?” Fry asked.
After the hearing, Fry said he plans to insert language that would require an open rate-review hearing into Senate Bill 357, which makes various changes to insurance regulations. He said his committee could consider that amendment as early as Thursday.
Fry said he wants “a process that’s more open, not done in the backroom.”