`

Company news

February 10, 2010

It’s the most famous rate hike in the country now. And that’s not good news for WellPoint Inc. The Indianapolis-based health insurer’s California subsidiary will raise customers’ premiums by as much as 39 percent this year, according to the Associated Press. That alarmed President Obama, who is trying to resurrect his health reform efforts. He cited the WellPoint rate hike in his Sunday interview with Katie Couric on CBS. "That's a portrait of the future if we don't do something now," Obama said. Also, Obama’s health secretary, Kathleen Sebelius, fired off a letter to WellPoint, demanding an explanation. The Obama administration has no authority in the matter, and the California insurance department says it can do nothing about a rate hike unless WellPoint’s pricing violates state rules. But California Insurance Commissioner Steve Poizner is hiring an outside actuary to make sure WellPoint’s rate hike won’t breach a state threshold that no more than 30 percent of premiums pay for overhead and profits. WellPoint, in a statement, blamed the rate hike on the weak economy, which has reduced WellPoint’s customer base by eliminating 7 million jobs, and on ever-rising costs for medical care. The rate hike "highlights why we need sustainable health care reform to manage the steadily rising costs of hospitals, drugs and doctors," the statement said.

 

Eli Lilly and Co. Chairman and CEO John C. Lechleiter received $16.4 million in total compensation last year, a 33.6-percent increase. The rest of Lilly’s executive team got an average 25.4-percent pay hike. The majority of pay for the top five Lilly executives came in the form of stock-based awards. But Lilly's stock performance has been dismal the past two years. Indianapolis-based Lilly faces a raft of patent expirations in the next five years that could sap more than half its current revenue. On top of that, it has suffered numerous setbacks on bringing drugs to market. Therefore, investors have sent Lilly’s stock price tumbling. Even counting Lilly’s substantial dividend, investors suffered a 21-percent loss in value in 2008 and another 6-percent loss in 2009. By contrast, Lilly’s profits have grown by double-digits each of the past two years.

 

Dublin, Ohio-based health care products distributor Cardinal Health LLC says it plans to cut more workers at its Indianapolis distribution center, bringing the number of recent layoffs to 49. Cardinal Health notified the state on Feb. 3 that it laid off 37 workers at the end of January and plans to lay off 12 more effective April 3. The center is at 6812 Corporate Drive on the city’s northwest side. The cuts eliminated 44 warehouse-operations associates, two operations managers, two warehouse supervisors and an assistant administrator. About 25 employees will be left at the facility after the layoffs.

ADVERTISEMENT