WellPoint Increases Its Profits By Increasing Premiums

In today's Wall Street Journal, Sarah Rubinstein reports on the growing trend of health insurers....raising premiums in order to boost profits. Is there light at the end of the tunnel?

"The high cost of health insurance has aggravated patients and employers and generated plenty of debate on the campaign trail. But there’s one constituency that tends to stomach price hikes just fine: investors.
One giant health insurer that’s certainly aware of the phenomenon is WellPoint, which has seen its profits drop 17% so far this year after underestimating how quickly health-care costs would rise. In an attempt to regain investor’s confidence, CEO Angela Braly has been boosting the monthly premiums that customers have to pay for WellPoint’s plans — in some cases quite a bit.
The result: In the first six months of the year, WellPoint lost 189,000 members in the business and individual plans that it insures, the WSJ reports this morning. The company projects an additional overall 150,000-member decline by December. Other corporate clients are shifting more of their costs to employees, to lessen price increases. Meanwhile, WellPoint’s share price has recovered somewhat since it plunged after the company cut its earnings forecast in March, but it’s still off around 40% this year.
Kenneth Goulet, head of WellPoint’s commercial-business division, says it would be irresponsible to set premiums that cut deep into margins or lose money. “That’s not sustainable,” Goulet says. “We’re developing products that meet the needs of customers, then pricing them with very good discipline.”
The WSJ notes that the conundrum of how to reassure investors that profit will be maintained without losing business is confronting the entire health-insurance industry. Other major insurers that have reported enrollment losses in employer plans since the first quarter include UnitedHealth Group, Health Net and Coventry Health Care."

Universal Healthcare is a big issue in Campaign '08

Emily P. Walker, Washington Correspondent, MedPage Today, published the following article from Denver regarding Sen. Hillary Clinton's stance on universal healthcare and its mention in her speech at the Democratic National Convention last night.

" Despite tortuous battles during the presidential primaries over the nuances of healthcare reform, Sen. Hillary Clinton was ringing in her support for Sen. Barack Obama's goals at the Democratic National Convention here.
In a so-called unity speech last night, Clinton said that she ran for president in part to "create a healthcare system that is universal, high quality, and affordable so that parents no longer have to chose between care for themselves or their children or be stuck in dead-end jobs simply to keep their insurance."
She added, "I can't wait to watch Barack Obama sign a healthcare plan into law that covers every single American."
Clinton, who was in charge of the failed healthcare reform initiative during her husband's presidency, was scheduled to headline a forum today called "Winning Healthcare Reform in 2009."
Earlier yesterday, some figures in the entertainment world took advantage of the massive press turnout here to draw attention to the plight of children with type 1 diabetes in developing nations.
Among the famous faces were film stars Susan Sarandon, Anne Hathaway, Zooey Deschanel, and Matthew Modine, and hair-guru Paul Mitchell.
The celebrities are all part of the Creative Coalition, a Hollywood non-partisan political and social advocacy group.
At the luncheon, sponsored by Creative Coalition, a clip of a documentary was shown, called "Life for a Child," produced by the International Diabetes Fund and drug-maker Lilly. It tells the story of kids living with type 1 diabetes in Nepal.
Still earlier, Family USA responded to new Census Bureau figures that showed that more Americans had health insurance coverage in 2007 than in 2006.
Families USA, which advocates universal healthcare access, said the increase in insured Americans stems in part from people trading in their employer-sponsored plans for Medicaid.
In fact, healthcare coverage for workers is getting worse, said Ron Pollack, executive director of Families USA. According to Pollack, in 2000, 64.2% of the public was covered by employer-sponsored insurance. In 2007, it was reduced to 59.3%.
"As employer-sponsored health coverage continues to erode, it is important that meaningful healthcare reform become the top and earliest domestic priority of the next president and Congress," said Pollack. "