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Shareholder group wants WellPoint to become not-for-profit

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Saying WellPoint Inc. has failed to live up to its commitment to provide “the best healthcare value” for customers, three shareholders of the Indianapolis-based health insurance giant want it to convert to a not-for-profit organization.

They have proposed that the company study the feasibility of such a conversion. The proposal will be voted on at WellPoint’s annual meeting of shareholders in Indianapolis on May 18.

The proposal was disclosed Friday in WellPoint’s proxy statement. The three shareholders—Rob and Karen Stone of Bloomington and Julia Vaughn of Indianapolis—will stage a press conference about the proposal Wednesday morning in front of WellPoint’s Monument Circle headquarters.

“WellPoint has had a heap of (well-deserved) bad publicity lately about their corporate culture of greed,” Rob Stone, an emergency physician at Bloomington Hospital, wrote in an e-mail. He referred to recent controversy over WellPoint's premium hikes in California, Indiana and other states, and to Friday’s report that its executives enjoyed boosts in compensation last year ranging from 50 percent to 75 percent.

WellPoint's board of directors urged shareholders to vote the proposal down.

“The proponent of this proposal has not presented any factual information to support the view that converting to nonprofit status would benefit us or our shareholders, employees, customers and members,” the board members wrote in a statement in WellPoint’s proxy filing. They said a feasibility study of the issue “would be costly and would distract management and the Board from overseeing our operations.”

Board members added that as a not-for-profit organization, the company would have poorer access to capital and, by not being able to pay executives with stock, would have a harder time attracting top-level managers.

WellPoint’s predecessor company, Anthem Inc., was a mutual insurance company until its initial public offering in 2001. It was, however, always a for-profit entity. Many of the companies acquired by Anthem or other WellPoint predecessors did convert from not-for-profit to for-profit status before being acquired.

The Stones and Vaughn would like to see the United States adopt a single-payer health insurance system, where the U.S. government would act as insurer for all Americans. Their proposal claims that WellPoint spends as much as 19 percent of its premium dollars on administration and profit, compared with about 3 percent spent on overhead by the federal Medicare insurance program for seniors.

“Although this is good for WellPoint’s profitability and share price, it supports the argument that for-profit health insurance is a major reason for the discrepancy in overhead expenses between the U.S. and other countries,” the shareholder proposal reads. “Nations with universal systems spend about half what we spend on a per-capita basis and have better health outcomes.”

During last year's annual shareholder meeting, Rob Stone called informally for WellPoint's board to re-mutualize the company.
 

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  • Health Insurance Giants
    Health insurace companies add no value to health care. A third of your premium dollars goes to corporate profits, executive salaries, and a bureaucracy that exists to keep you from getting the health care you need. Wouldn't it be better to spend that on actual care and research? Just think about it.
  • well said...
    Hattie and Dr. Stack...took the words right out of my mouth!
  • socialism? or Common Sense?
    Every other modern democracy in the industrialized world covers its people with some version of a single payer, nonprofit health care system. They know how to provide quality care while controlling costs, yet they spend half what we do. The insurance industry middlemen are indeed "parasitic, leeches" siphoning off 20-30 cents of every US health care dollar. That money is needed for care! Save lives, save family budgets, save our economy. Support single payer. Bravo to Dr. Stone and Hoosiers for a Common Sense Health Plan.
    • obsolete industry
      bravo to dr. stone and julia vaughn and colleagues for their efforts to point out the destructive nature of wellpoint and its underlying industry.
    • Dump the Shares
      Why are they shareholders? They have been making money since they purchased stock so if they don't like making money then sell their shares.
    • Shareholder Group???
      The three person group gets separate article in IBJ, things must really be slow in Indy.
    • Wellpoint
      My opinion is that this country was founded on being able to make a profit. The USA is a democratic society, not socialistic like other countries in Europe. I believe we to watch what the government does with private business. If you want socialism then move to Russia or another socialistic type of government. Yes big brother will always be watching, but we need smaller government not, the governments hand into everything. Just because we live in the USA doesn't entitle us to all things. Yes I believe everyone should have health care, but I dont believe the government needs to provide it.
      We still have people immigrating to the USA because they feel that is the greatest country on earth. They have an opportunity to make themselves and their families a living. They come here because they feel they can better themselves here. What happened to making a living for your family, not demanding to make a living. Just because you live in the USA doesnt mean you deserve to make money by living off the government.
      • Interesting
        I think this concept should at leased be looked at by the Board. That's all these individuals are asking is to look into it more deeply. They have some valid reasoning for doing so. However, if it were to be a true Non-Profit - this would wreck havoc on Marion County and some of the outlying communities that Anthem/WellPoint has offices in as a NFP status would mean no more Property Taxes as well. A HUGE blow to Marion County Taxpayers, the tax base, and other additional taxes collected.

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