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WellPoint helps usher in health care reform

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Year In Review

After eight months of grueling debate, health care reform looked stymied in January after the victory of Scott Brown in Massachusetts gave Senate Republicans enough votes to filibuster the bill. But then President Obama revived the bill by seizing on news of sharp premium hikes on individual customers by Indianapolis-based WellPoint Inc.

CEO Angela Braly was dragged before a congressional committee, and Democrats regrouped to push the bill into law. Obama signed it March 23.

WellPoint was later blasted by critics of the law for its ham-handed public and government relations—things that were touted as Braly’s skills when she was named CEO in 2007.

“It’s been a disaster,” said Bob Laszewski, an insurance consultant in Alexandria, Va. “It’s hard to believe retrospectively in her expertise in public policy.”

WellPoint officials said Obama and his administration had “targeted and villainized” the company to rally support for health insurance reform.

The law itself is a mixed bag for WellPoint and its peers. On one hand, the law requires all Americans to have health insurance and will pay more than $40 billion a year in subsidies to help an extra 16 million Americans to buy coverage.

Already, however, WellPoint and its peers face many new regulations on their businesses. They can no longer reject customers because they’re sick and cannot cap customers’ benefits via lifetime maximum provisions.

Also, health insurers must spend at least 80 percent of the premiums they collect—and 85 percent for large-employer accounts—on medical care, potentially limiting their profits.

Lower profits and more complex regulations will lead many smaller insurers to sell to larger ones, and WellPoint executives say they expect to be active in acquisitions in the next few years.

Having an estimated 32 million new Americans with insurance coverage drew support for the law from Indianapolis-based Eli Lilly and Co. and the pharmaceutical industry. But new industry fees, larger Medicaid rebates and other provisions now have analysts expecting it to trim pharma profits.

The law also approved new methods of paying doctors and hospitals, which has accelerated a trend of doctor-hospital mergers.•

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  1. The $104K to CRC would go toward debts service on $486M of existing debt they already have from other things outside this project. Keystone buys the bonds for 3.8M from CRC, and CRC in turn pays for the parking and site work, and some time later CRC buys them back (with interest) from the projected annual property tax revenue from the entire TIF district (est. $415K / yr. from just this property, plus more from all the other property in the TIF district), which in theory would be about a 10-year term, give-or-take. CRC is basically betting on the future, that property values will increase, driving up the tax revenue to the limit of the annual increase cap on commercial property (I think that's 3%). It should be noted that Keystone can't print money (unlike the Federal Treasury) so commercial property tax can only come from consumers, in this case the apartment renters and consumers of the goods and services offered by the ground floor retailers, and employees in the form of lower non-mandatory compensation items, such as bonuses, benefits, 401K match, etc.

  2. $3B would hurt Lilly's bottom line if there were no insurance or Indemnity Agreement, but there is no way that large an award will be upheld on appeal. What's surprising is that the trial judge refused to reduce it. She must have thought there was evidence of a flagrant, unconscionable coverup and wanted to send a message.

  3. As a self-employed individual, I always saw outrageous price increases every year in a health insurance plan with preexisting condition costs -- something most employed groups never had to worry about. With spouse, I saw ALL Indiana "free market answer" plans' premiums raise 25%-45% each year.

  4. It's not who you chose to build it's how they build it. Architects and engineers decide how and what to use to build. builders just do the work. Architects & engineers still think the tarp over the escalators out at airport will hold for third time when it snows, ice storms.

  5. http://www.abcactionnews.com/news/duke-energy-customers-angry-about-money-for-nothing

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