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.
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
“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
“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.
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.”