[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]
PREMIUM INCREASES BY ANTHEM BLUE CROSS IN THE INDIVIDUAL HEALTH
INSURANCE MARKET
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HEARING
BEFORE THE
SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS
OF THE
COMMITTEE ON ENERGY AND COMMERCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED ELEVENTH CONGRESS
SECOND SESSION
__________
FEBRUARY 24, 2010
__________
Serial No. 111-97
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Printed for the use of the Committee on Energy and Commerce
energycommerce.house.gov
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COMMITTEE ON ENERGY AND COMMERCE
HENRY A. WAXMAN, California, Chairman
JOHN D. DINGELL, Michigan JOE BARTON, Texas
Chairman Emeritus Ranking Member
EDWARD J. MARKEY, Massachusetts RALPH M. HALL, Texas
RICK BOUCHER, Virginia FRED UPTON, Michigan
FRANK PALLONE, Jr., New Jersey CLIFF STEARNS, Florida
BART GORDON, Tennessee NATHAN DEAL, Georgia
BOBBY L. RUSH, Illinois ED WHITFIELD, Kentucky
ANNA G. ESHOO, California JOHN SHIMKUS, Illinois
BART STUPAK, Michigan JOHN B. SHADEGG, Arizona
ELIOT L. ENGEL, New York ROY BLUNT, Missouri
GENE GREEN, Texas STEVE BUYER, Indiana
DIANA DeGETTE, Colorado GEORGE RADANOVICH, California
Vice Chairman JOSEPH R. PITTS, Pennsylvania
LOIS CAPPS, California MARY BONO MACK, California
MICHAEL F. DOYLE, Pennsylvania GREG WALDEN, Oregon
JANE HARMAN, California LEE TERRY, Nebraska
TOM ALLEN, Maine MIKE ROGERS, Michigan
JANICE D. SCHAKOWSKY, Illinois SUE WILKINS MYRICK, North Carolina
CHARLES A. GONZALEZ, Texas JOHN SULLIVAN, Oklahoma
JAY INSLEE, Washington TIM MURPHY, Pennsylvania
TAMMY BALDWIN, Wisconsin MICHAEL C. BURGESS, Texas
MIKE ROSS, Arkansas MARSHA BLACKBURN, Tennessee
ANTHONY D. WEINER, New York PHIL GINGREY, Georgia
JIM MATHESON, Utah STEVE SCALISE, Louisiana
G.K. BUTTERFIELD, North Carolina
CHARLIE MELANCON, Louisiana
JOHN BARROW, Georgia
BARON P. HILL, Indiana
DORIS O. MATSUI, California
DONNA M. CHRISTENSEN, Virgin
Islands
KATHY CASTOR, Florida
JOHN P. SARBANES, Maryland
CHRISTOPHER S. MURPHY, Connecticut
ZACHARY T. SPACE, Ohio
JERRY McNERNEY, California
BETTY SUTTON, Ohio
BRUCE L. BRALEY, Iowa
PETER WELCH, Vermont
Subcommittee on Oversight and Investigations
BART STUPAK, Michigan, Chairman
BRUCE L. BRALEY, Iowa GREG WALDEN, Oregon
Vice Chairman Ranking Member
EDWARD J. MARKEY, Massachusetts ED WHITFIELD, Kentucky
DIANA DeGETTE, Colorado MIKE FERGUSON, New Jersey
MIKE DOYLE, Pennsylvania TIM MURPHY, Pennsylvania
JANICE D. SCHAKOWSKY, Illinois MICHAEL C. BURGESS, Texas
MIKE ROSS, Arkansas
DONNA M. CHRISTENSEN, Virgin
Islands
PETER WELCH, Vermont
GENE GREEN, Texas
BETTY SUTTON, Ohio
JOHN D. DINGELL, Michigan (ex
officio)
C O N T E N T S
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Page
Hon. Bart Stupak, a Representative in Congress from the State of
Michigan, opening statement.................................... 1
Hon. Michael C. Burgess, a Representative in Congress from the
State of Texas, opening statement.............................. 4
Hon. Henry A. Waxman, a Representative in Congress from the State
of California, opening statement............................... 5
Hon. Phil Gingrey, a Representative in Congress from the State of
Georgia, opening statement..................................... 7
Hon. Diana DeGette, a Representative in Congress from the State
of Colorado, opening statement................................. 8
Prepared statement........................................... 10
Hon. Parker Griffith, a Representative in Congress from the State
of Alabama, opening statement.................................. 12
Hon. Bruce L. Braley, a Representative in Congress from the State
of Iowa, opening statement..................................... 12
Prepared statement........................................... 14
Hon. Gene Green, a Representative in Congress from the State of
Texas, opening statement....................................... 17
Hon. Edward J. Markey, a Representative in Congress from the
Commonwealth of Massachusetts, opening statement............... 18
Hon. Donna M. Christensen, a Representative in Congress from the
Virgin Islands, opening statement.............................. 19
Hon. Betty Sutton, a Representative in Congress from the State of
Ohio, prepared statement....................................... 20
Hon. Peter Welch, a Representative in Congress from the State of
Vermont, opening statement..................................... 21
Hon. Janice D. Schakowsky, a Representative in Congress from the
State of Illinois, opening statement........................... 21
Hon. John D. Dingell, a Representative in Congress from the State
of Michigan, prepared statement................................ 101
Hon. Baron P. Hill, a Representative in Congress from the State
of Indiana, prepared statement................................. 104
Witnesses
Jeremy Arnold, Los Angeles, California........................... 23
Prepared statement........................................... 25
Julie Henriksen, Westchester, California......................... 27
Prepared statement........................................... 29
Lauren Meister, West Hollywood, California....................... 31
Prepared statement........................................... 33
Angela Braly, President and CEO, Wellpoint, Incorporated......... 54
Prepared statement........................................... 57
Cynthia Miller, Executive Vice President, Chief Actuary and
Integration Management Officer, Wellpoint, Incorporated........ 75
Prepared statement \1\
Submitted Material
Letter of February 17, 2010, from Mr. Dingell to the National
Association of Insurance Commissioners......................... 106
Letter of February 23, 2010, response from the National
Association of Insurance Commissioners to Mr. Dingell...... 108
----------
\1\ Ms. Miller did not submit a prepared statement.
PREMIUM INCREASES BY ANTHEM BLUE CROSS IN THE INDIVIDUAL HEALTH
INSURANCE MARKET
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WEDNESDAY, FEBRUARY 24, 2010
House of Representatives,
Subcommittee on Oversight and Investigations,
Committee on Energy and Commerce,
Washington, DC.
The Subcommittee met, pursuant to call, at 10:03 a.m., in
Room 2123 of the Rayburn House Office Building, Hon. Bart
Stupak [Chairman of the Subcommittee] presiding.
Present: Representatives Stupak, Braley, Markey, DeGette,
Schakowsky, Christensen, Welch, Green, Sutton, Waxman (ex
officio), Capps, Eshoo, Hill, Burgess, Gingrey, and Griffith.
Staff present: Phil Barnett, Staff Director; Kristin
Amerling, Chief Counsel; Bruce Wolpe, Senior Advisor; Sarah
Despres, Counsel; Purvee Kempf, Counsel; Naomi Seller, Counsel;
Jack Ebeler, Senior Advisor on Health Policy; Stephen Cha,
Professional Staff Member; Dave Leviss, Chief Oversight
Counsel; Stacia Cardille, Counsel; Ali Golden, Professional
Staff Member; Erika Smith, Professional Staff Member; Ali
Neubauer, Special Assistant; Karen Lightfoot, Communications
Director, Senior Policy Advisor; Elizabeth Letter, Special
Assistant; Matt Eisenberg, Staff Assistant; Sean Hayes,
Minority Counsel; Alan Slobodin, Chief Minority Counsel; Clay
Alspach, Minority Counsel; and Garrett Golding, Minority
Legislation Analyst.
OPENING STATEMENT OF HON. BART STUPAK, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF MICHIGAN
Mr. Stupak. This meeting will come to order. Today we have
a hearing entitled ``Premium Increases by Anthem Blue Cross in
the Individual Health Insurance Market.'' Before we begin, I
ask unanimous consent that the contents of our supplemental
memo be entered into the record. This supplemental report is in
regards to our investigation in the small business health
insurance market. We had a draft last night and I think it was
just finalized today. And the company documents with that memo,
there is a document binder I think we all have agreed on. So
without objection, they will be entered into the record. I
should also note for the record that members will be going back
and forth 2 floors up. Consumer Protection and Trade
Subcommittee is also having a hearing on telecommunications,
which many of our members are members of both subcommittees,
and they will be going back and forth for this hearing.
Right now the chairman, ranking member and chairman
emeritus will be recognized for 5-minute opening statement.
Other members of the subcommittee will be recognized for a 3-
minute opening statement. I will begin. Today's hearing is the
fifth hearing in this Congress that our subcommittee has
examined questionable business practices in the private health
insurance market. One of the hearings we had last year examined
the problem of under insurance. We heard stories about ordinary
citizens who thought they had sufficient health insurance but
learned that their policies were inadequate when they needed
them most.
We also looked into the problem of small businesses
purging, which is when a health insurance company raises
premiums to a point it is unaffordable for businesses to
continue their health coverage. Lastly, we held 2 hearings on
rescissions, which is the private insurance industry practice
of terminating coverage after a policy holder becomes sick so
the company can avoid paying expensive and much needed health
care. Our hearing today will focus on rate increases in the
individual insurance market in California. We will examine what
is happening when insurance companies have no limitation or
accountabilities under rate increases. While most Americans
receive health insurance through their employer in a group
market or through government-assisted programs such as Medicare
and Medicaid more than 15 million Americans receive their
health insurance through the private individual market.
The individual health insurance market is unique in that
companies are limited in their ability to spread their risk
among a larger population. While today's hearing will focus on
WellPoint's proposed premium increase in California, this is a
national problem. According to a disturbing report released
today by the Center for American Progress WellPoint has
implemented or proposed double digit rate increases in 11 of
the 14 states in which they operate. In Maine, WellPoint raised
individual rates by 23 percent this years after 5 straight
years of double digit increases for individual policy holders
in that state.
Likewise, Indiana residents covered by certain WellPoint
policies will endure a rate increase of 21 percent. In Georgia,
WellPoint policy holders face a 21 percent increase in 2009 and
are anticipating a similar rate increase again this year. And
in the west, Colorado expects average rate increases in
WellPoint policies of nearly 20 percent and as high as 24.5
percent this year. But as residents of my home state know, the
problem is not limited to WellPoint subscribers. Some Michigan
policy holders are facing a proposed rate increase of 56
percent in the individual market.
On January 26 this year WellPoint sent out letters advising
800,000 California policy holders of possible rate increases
for the coming year. As it turns out, nearly 700,000 WellPoint
subscribers received rate increases of as much as 39 percent.
WellPoint has tried to justify their rate increases through a
high profile media campaign reassuring policy holders,
congressional leaders, and the Administration that the proposed
rate increases are necessary due to rising medical costs and
declining business resulting from economic difficulties, not
from padding their bottom line.
Through our investigation, we discovered internal documents
that suggest a closer relationship between the proposed premium
increases and WellPoint's profits. The documents reveal that
WellPoint sought inflated premium increases as a negotiating
tool with the California Department of Insurance. WellPoint
also appears to be directing policy holders to less generous
health insurance plans as a way to lower medical claims while
awarding their executives excessive salaries and paying for
lavish retreats. In our insurance rescission investigation last
year, we learned that if an insurance company believes your
illness may be costly, it will go back and re-examine your
initial application to find an excuse to cancel your coverage.
As health insurance industry executives brazenly told us
this practice will continue until there is national health care
reform to expressly prohibit it. In this case here, we are
reminded of this sad fact. An internal WellPoint document tells
us that the practice of rescission is a ``key issue'' for
maintaining lower medical loss ratios. Our first panel will put
a face on the frightening premium increases that have affected
California. Lauren Meister received notice that WellPoint
increased her rates by 38.6 percent. WellPoint offered her an
alternative plan that does not cover the brand name medications
she requires to treat a chronic condition.
Julie Henriksen is a single mother with 2 children.
WellPoint has proposed to raise her premiums by 30 percent. One
of her 2 sons was born with a hole in his heart and required
open heart surgery at age 3, and now requires annual care from
a cardiologist. If Lauren switches to the alternative plan
WellPoint has offered she will have to pay $5,000 out of pocket
before her insurance even kicks in. Jeremy Arnold has
experienced rate increases on his WellPoint policy totaling 74
percent between 2009 and 2010. Anthem has proposed to increase
his rates 38 percent this year. We will also be hearing from
Angela Braly, the President and CEO of WellPoint. Accompanying
her is Cynthia Smith, WellPoint's Executive Vice President and
chief actuarial. I look forward to their testimony to help this
committee understand why WellPoint made the decision to raise
premiums this year by up to 39 percent.
Tomorrow the White House will be holding a summit to
discuss the President's newly released health care reform
proposal. Included in this proposal is language granting the
states the authority to regulate rate increases by private
health insurers like WellPoint. This hearing could not come at
a better time. It provides a frightful reminder that unless
Congress and the Administration acts, Americans across the
country will continue to experience large premium increases and
will be priced out of the market. With limited or no health
care coverage, we are all just one injury or illness away from
bankruptcy. Next, I would yield to the gentleman from Texas,
Mr. Burgess, and welcome him sitting officially as the ranking
member now of the Oversight and Investigations Committee. I
look forward to working with him throughout this Congress. And,
Mr. Burgess, your opening statement, please.
OPENING STATEMENT OF HON. MICHAEL C. BURGESS, A REPRESENTATIVE
IN CONGRESS FROM THE STATE OF TEXAS
Mr. Burgess. Thank you, Mr. Chairman. We will see if you
still feel that way after a few months. I thank you and
Chairman Waxman for allowing us to have this hearing today. I
want to thank the witnesses who traveled far and wide to come
and be with the committee today and to share their stories
about the purchasers of health insurance and the people who
provide health insurance. You know, it is odd, Mr. Chairman,
you look around the room and you don't see the insurance
commissioner of the State of California, which really strikes
me as odd in a hearing of this nature. If the reason for this
hearing is to determine whether a state insurance company has
violated a state's regulations then you would think logically
that the head of the state's regulatory agency would be present
and be with us.
But here today we have Anthem, WellPoint's California
subsidiary, in a dispute with the California insurance
commissioner. The evidence shows that Anthem submitted, as
required, by California state requirements, their actuarial
determinations as to why they needed to decrease premiums less
than 20 percent as well as raise some premiums as high as 39
percent. The evidence also shows that the California state
insurance commissioner did nothing with the actuarial
information they were given by Anthem. They did not raise a
single complaint for over 4 months. Now why the federal
government is involved in a state issue, a state dispute, to me
presupposes that the fundamental difference between the line of
thinking between national Democrats and national Republicans in
the health care debate.
The central argument of the Democratic Party is that we
need a national single federal regulator oversee all health
insurance companies but Republicans believe fundamentally that
insurance is a state issue and based on risk pools how many
people get sick at one time versus how many healthy people
there are who won't get sick. So the actuaries look at the
market place and determine this ratio. And, of course, we are
involved right now in this tremendous, tumultuous health care
debate or what used to be called a health care debate before
the President renamed it health insurance reform, and that is
why the timing of this hearing couldn't be more coincidental.
And just for the record, I never attribute anything to
coincidence if it can be adequately explained by conspiracy.
Tomorrow, the President is holding a bipartisan photo-op on
health insurance reform at the White House, a 6-hour photo-op,
so it is a significant photo-op, and his Secretary of Health
and Human Services has used the state-based issue, the increase
of Anthem's in the State of California to increase support as
another reason why we need a $1 trillion or $2 trillion health
reform package. In fact, his Secretary of Health and Human
Services has said that the profits of Anthem are outrageous,
her words, and that the insurance companies should not make
that much money. Why does profit matter if the actuaries have
done their work?
I will agree, a 39 percent premium is a huge number, a big,
scary number but it may be irrelevant in this debate if the
debate is on whether or not the business model of the insurance
should be based on what the actuaries are determining is a risk
spread. Now I make no apologies for the insurance companies.
They are certainly capable of defending themselves, and, if
not, then they deserve what they get but I think a GAO report
needs to be commissioned to study how the insurance companies
determine how much they are going to charge with their
premiums, but if the numbers show that there will be a
precipitous decline in the number of people who are in the risk
pool then any number, no matter how big, may in fact turn out
to be acceptable.
So if we are just focused on solving a dispute between
California and Anthem, whose actuary is right, now wouldn't
that be a stimulating hearing? We could have dueling actuaries.
If Anthem is right, their actuary portrayed an accurate risk
for the State of California, or is the California Department of
Insurance right to complain 4 months after the fact that Anthem
is a bad insurance company. But, you know what, we are really
not here to answer those questions. We are here to answer
whether there needs to be reform in the health care industry as
a whole. And I will tell you as a practicing physician for over
25 years, there needs to be. Costs are a problem. Yet, after
months and months of debate, we really haven't figured out how
to answer the question of how do we bend the cost curve or
actually we have figured out to bend it in the wrong direction.
We haven't determined whether these costs are conclusively
attributable to the business practices of health care
providers, who are sometimes impugned, or the insurance, who
are often impugned, or whether these costs are attributable to
what the First Lady is focusing on, lifestyle choices, diet,
exercise, and the epidemic of obesity. Or maybe it is just that
people are living longer and the cost of treating an older
generation were never envisioned when we created Medicare back
in the '60s. And, of course, there is the advancing complexity
of what we are able to do. The very fact that we have more than
one cholesterol-lowering medication on the market is
significant. What we can all agree on is there needs to be
reforms in the health industry. Let us get rid of pre-existing
conditions and lifetime caps. I am for that. Let us work on
tort reform. How about increased competition? I could be for
that.
Increased flexibility and portability, who would be against
that? How about some improvements for people who are stuck in
the COBRA system so they are not stuck with such a high
premium? I could be for that. But, you know, we are going to
turn our attention to the President's summit tomorrow. I hope
the President, I hope the President is truly interested in
including good ideas regardless from which side of the dais
they emanate. I will yield back the balance of my time.
Mr. Stupak. Thank you, Mr. Burgess. Mr. Waxman, chairman of
the full committee. Thanks for being here, and I look forward
to your opening statement.
OPENING STATEMENT OF HON. HENRY A. WAXMAN, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF CALIFORNIA
Mr. Waxman. Chairman Stupak, thank you for convening this
important and timely hearing. On February 4, the Los Angeles
Times reported that Anthem Blue Cross, a subsidiary of
WellPoint, intended to raise its rates as much as 39 percent
for their 800,000 individual policy holders in California. And
I want to single out Duke Helfon and Lisa Garrion, who are
reporters who have done excellent work on this issue and
brought to our attention the rescissions as well which has been
a tactic used by those who cover individuals for insurance
policies. By any measure, this was a breathtaking increase in
health insurance costs. We are holding today's hearing to find
out what is really driving these enormous rate increases.
WellPoint says the rate increases are a result of medical
inflation and healthier policy holders dropping coverage. But
the thousands of pages of WellPoint documents we have reviewed
tell another story. They tell a story not about costs but about
profits, not about increasing coverage but about reducing
benefits to policy holders, not about removing barriers to
coverage but about erecting new ones, not about covering more
people who have illnesses, but about cutting them off and
seeking out new customers who are healthier and wealthier.
The documents also tell a story of potential huge new
premium rate increases still to come. WellPoint says that its
rate increases have nothing to do with increasing company
profits, but an internal company e-mail says that its rate
increase would ``return California to target profit of 7
percent.'' WellPoint says that its rate increases are
absolutely necessary, but its internal company documents
describe a plan to build in a cushion to allow for
negotiations. The company told its board of directors that its
average rate ask would be 25 percent but that its final rate
increase would only be 20 percent. Other documents raised the
possibility that WellPoint may have manipulated its actuarial
assumptions to keep its medical loss ratio, a key measure
reviewed by California regulators, flat.
The documents we have reviewed show WellPoint is proposing
its highest increases on its more generous plans, and at the
same time it is actively developing new products called
downgrade options that reduce benefits for its policy holders.
As we will hear from the witnesses on our first panel, this
purging process cuts coverage for WellPoint policy holders when
they need it the most, when they get sick, and the WellPoint
documents point to a future of even higher rate increases.
WellPoint told committee staff that WellPoint voluntarily
capped its maximum rate increase at 39 percent. Well, if
WellPoint had not done this some policy holders could have
faced rate increases of over 200 percent.
Mr. Chairman, we have circulated a memorandum to members
describing these documents, and I know they are now part of the
record. One question we asked is where does all of this money
go? We have learned that in 2008 WellPoint paid 39 senior
executives over a million dollars cash each, and the company
spent tens of millions of dollars more on expensive corporate
retreats. During 2007 and 2008, WellPoint spent $27 million on
103 executive retreats. One retreat in Scottsdale, Arizona cost
over $3 million. Corporate executives at WellPoint are
thriving, but its policy holders are paying the price.
Ultimately, what this hearing will show is that the current
system is absolutely unsustainable. If we fail to pass health
reform, insurance rates will skyrocket and health insurance
will become so expensive only the most healthy and the most
wealthy will be able to afford coverage.
Health insurers like WellPoint may get richer, but our
nation's health will suffer. We cannot go down this road
forever. It is breaking our middle class and it will bankrupt
our nation. We will learn much from today's hearing, Mr.
Chairman, and I hope we will apply these lessons when we meet
at the White House tomorrow and in the days and weeks to come.
We have got to reform the current health care system.
Individual insurance seeks not to spread the cost but to
exclude people from coverage so that they will not cost the
insurance companies more money, and that is not insurance that
is going to protect people who need it the most when they get
sick. Thank you, Mr. Chairman.
Mr. Stupak. Thank you, Mr. Waxman. Mr. Gingrey, for an
opening statement, please, 3 minutes.
OPENING STATEMENT OF HON. PHIL GINGREY, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF GEORGIA
Mr. Gingrey. Thank you, Mr. Chairman. And, Mr. Chairman, I
want to join with you and all of our colleagues in welcoming
and congratulating my OB GYN colleague on our side of the aisle
as the new ranking member of the subcommittee, and I
congratulate Dr. Burgess. First off, these patients here today,
they need reform, as do many patients who find it increasingly
hard to afford health insurance or chronically ill patients who
cannot find a policy because they are simply too sick to
insure. The increases they receive especially in an economy
like the one we are currently experiencing are tough to
justify, and I would like to thank them for coming today and we
look forward to your testimony.
Throughout the past year, many in this Congress have seemed
to operate in a bubble seemingly oblivious to the needs or the
wants of their constituents because of ideological reasons. We
started this Congress with the hope that we would work together
to reform our health care system. What we ended up finding was
a Congress more prone to closing doors than opening them
creating special deals to, yes, buy Democratic votes instead of
compromising to find Republican ones. I along with many of my
colleagues continue to write the President and Democratic
leadership offering my medical advice. Unfortunately, they have
yet to respond.
So whether it becomes a paycheck doesn't bring home enough
money to afford it or our sickest patients cannot access it,
every American should have quality health care. A majority of
Americans, and an overwhelming majority of Congress strongly
agree with that sentiment. Yet, here we sit without a health
reform bill because Washington continues to pursue a bill that
they cannot sell to the American people. The Obama plan is the
same bill with a few minor changes, notably changes that favor
unions, increase cuts to senior's health plans. If it was a
popular bill, we would not be sitting here today. If it was a
good bill, we would not be sitting here today.
Mr. Chairman, the American people simply do not want the
Obama plan. Every day that this Administration and this
Congress spends in backroom meetings on the Obama plan is one
day too many. I believe I can speak for every member of this
committee when I say that we can fix the problems in our health
care system. The only thing standing in the way of that goal is
a simple, yet inconvenient truth, the plan President Obama and
Democratic leaders want is not what the American people want.
Mr. Chairman, I believe that the Democratic majority has a
decision to make. If they truly want health care reform, they
will need to get rid of the bill that Americans don't want. If
they want bipartisan health reform, they will need to invite
Republicans to work with them to help create legislation, not
just invite them to review that has already been created and
now, of course, plused up by another $100 billion.
Inviting Republican leadership to a televised meeting at
the Blair House while secret meetings on the Obama plan
continue at the White House is not the change that the American
people want or will accept. I look forward to the witnesses'
testimony. And, Mr. Chairman, I will yield back as my time has
expired.
Mr. Stupak. Thank you, Mr. Gingrey. Ms. DeGette for opening
statement, please, 3 minutes.
OPENING STATEMENT OF HON. DIANA DeGETTE, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF COLORADO
Ms. DeGette. Mr. Chairman, I will submit my opening
statement for the record. But I want to say I am offended by
some of the things that my colleague from Georgia just said,
and the reason why I am offended by them, it is one thing for
us to disagree about the content of a health care bill. It is
another thing to disparage people's motives. Now there are a
lot of motives to be disparaged on both sides of the aisle, but
I will say every single member of this committee who has worked
on this bill from Chairman Waxman to the ranking member to
everybody else has worked hard on this bill. Now Mr. Gingrey
and his colleagues may not like the bill that this committee
passed, but they cannot deny that we spent hours of hearings in
this committee and we spent hours of markups considering
amendments from both sides. And if you don't like the bill,
that is just fine. That is not a partisan problem. That is a
problem of not liking the bill, and I understand that.
But I would ask that Mr. Gingrey and everybody else just
quit painting everybody with the same broad brush because if we
ever hope to restore a spirit of comity to this committee and
this Congress attacks like that should not be countenanced on
either side of the aisle. I want to say one more thing. There
really is a problem here that we are trying to deal with, and I
don't think anybody in this room would disagree with that. As
the chairman said, there are proposed rate increases by Anthem
Blue Cross in California, in Michigan, in Connecticut, in
Maine, in Oregon and Rhode Island, and 20 percent in my home
state of Colorado. Now today on the floor they are going to
have a bill repealing the antitrust exemptions of the McCarran-
Ferguson Act.
Only 2 industries currently enjoy those exemptions, and
that is the health care industry and major league baseball. I
guess we can talk about major league baseball later this year.
But if we want more competition, it would seem to me that this
would be a good start, and I would hope my friends on both
sides of the aisle would vote for this bill. In the meantime
though to deny that there is a problem to say, well, you know,
the insurance companies because medical costs are going up have
to increase their premiums like this is denying the fact that
my constituents and everybody in this room constituents cannot
buy insurance policies on the individual market because they
cannot afford to pay these rate increases.
And I have people come to me every day and talk to me about
this. Some of them are related to me, and I am sure everybody
in this room has experienced those same issues. So, you know,
my view--and I have worked with Mr. Gingrey. I have worked with
everybody in this room. They know that I am not particularly a
partisan person, that I try to work on these issues in a
bipartisan way. So I would say on both sides of the aisle let
us cut it out. If we don't like each other's bills, let us just
debate against the bills. Let us stop disparaging their
motives. And I yield back.
[The prepared statement of Ms. DeGette follows:]
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Mr. Gingrey. Mr. Chairman, since Ms. DeGette mentioned my
name, can I have 30 seconds to respond?
Mr. Stupak. No, let us move on. We are not going to go back
and forth. We will have an opportunity later. Maybe Mr.
Griffith can yield you some time, but yield now to Mr. Griffith
for 3 minutes for an opening statement.
OPENING STATEMENT OF HON. PARKER GRIFFITH, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF ALABAMA
Mr. Griffith. Thank you very much for the opportunity, and
I certainly appreciate being here. The good news about health
care reform is that everyone would like to see it happen. The
discussion of how it might happen has certainly been ongoing
and will continue to be ongoing. One of the bills that was
passed this year that I think got not as much applause as it
should have was the FDA's ability to control tobacco, a huge,
life saving bill in and of itself. That in and of itself was
health care reform, and I think Chairman Waxman needs to be
proud of that. And I know as a cancer specialist, I am
certainly proud of it.
One quick comment is that in order to reform health care,
we must understand we cannot reform it around a shortage, and
the shortage are MDs. There is a difference between coverage
and access. We have millions of Americans covered today who
can't access health care because we don't have enough providers
to take care of them. So if we gave everyone in America a
little card that said USA health care our emergency rooms would
still be just as busy as they are, just as crowded. We would
still have just as much trouble getting our Medicare and
Medicaid and our pediatric patients seen, and so any part of
reform or improvement in health care must include a major
increase in the number of medical schools, a major increase in
the number of young men and women who are entering medical
school, and we need to increase our mid-level providers, our
nurse practitioners. We must increase their ability to see our
chronically ill and do education.
Half of all deaths in America over the next hundred years
will be lifestyle-related. There will be smoking, overeating,
not enough exercise, unrelated to infection or malignant
disease. Thank you, Mr. Chairman.
Mr. Stupak. Thank you, Mr. Griffith. And I should say
welcome to the committee. It is your first time with us.
Welcome to the committee. Next is Mr. Braley for an opening
statement.
OPENING STATEMENT OF HON. BRUCE L. BRALEY, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF IOWA
Mr. Braley. Thank you, Mr. Chairman. Even though the focus
of this hearing is on rate increases by Anthem Blue Cross what
we are really talking about is a problem that affects people
all over this country because it is not a new problem and the
point has been raised about health insurance reform versus
health care reform. I have always stressed the need for
comprehensive global health care reform, and we cannot afford
as a country not to move forward with health care reform. Even
though this hearing is focused on Anthem Blue Cross in the
State of California, this very same issue is facing my
constituents in Iowa. Last week, Well Mark Blue Cross/Blue
Shield, the largest health insurer in Iowa, announced it would
raise rates an average of 18 percent for Iowans who buy their
own health insurance, and that is expected to affect about
80,000 Iowans. Some of them will see their rates go up over 20
percent.
According to Well Mark, this is the largest annual increase
since 2006 and the troubling rise in premiums comes on top of
an average 9.3 percent increase for individual policy holders
last year, and a 54 percent increase in rates for individuals
over the past 5 years. So when asked about this, the company
spokesman noted that this was not related to anything that we
don't already deal with and blamed increase in chronic
conditions such as obesity and knee and hip ailments as well as
the price of prescription drugs and high tech medical imaging.
And this is what is very fascinating. He also said the real
way to make insurance more affordable is to lower health care
costs and require everyone to have insurance, which is one of
the very points that we have been struggling with in this
debate over how we address the problem of providing access to
health care coverage for millions of Americans. So I think
Iowans want to know exactly why companies like Well Mark and
WellPoint are raising rates on these individual plans and what
factors went into their decisions because everyone who is
affected by this deserves a detailed justification for the
increases from their insurance companies. They deserve to know
that their elected officials are working to ensure appropriate
and adequate oversight and regulation of the insurance industry
and working to ensure that they have access to quality
affordable health care.
That is why I believe this hearing is a good first start,
but it is also one more example about why we need comprehensive
health care reform in this country. All Americans deserve
access to quality affordable health care coverage as soon as
possible, and unless we look at all the contributing factors
including unregulated high increases in health insurance
premiums, which have been going on for decades in this country,
we are never going to get at the root of the problem and that
is why I look forward to the testimony of our witnesses. And I
yield back.
[The prepared statement of Mr. Braley follows:]
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Mr. Stupak. Thank you, Mr. Braley. Mr. Green, for an
opening statement, please.
OPENING STATEMENT OF HON. GENE GREEN, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF TEXAS
Mr. Green. Mr. Chairman, I want to thank you for holding
this hearing today on the recent individual health insurance
policy increases proposed by WellPoint and Anthem Blue Cross/
Blue Shield in California. Millions of Americans do not have
insurance through their employers or through public programs
and they turn to the individual insurance market to purchase an
insurance policy. Individuals who purchase insurance through
the individual market must go through sometimes a difficult
application process and often they are denied coverage through
pre-existing conditions. Even if they are approved for
coverage, they cannot afford the premiums in the individual
market. We do know that in tough economic times like these
health individuals drop their coverage to save money because
health premiums across the Board are too high, and because of
this occurrence could reduce this risk pools so significantly
that extreme premium increases are necessary for those
individuals who want to maintain their individual policies.
At least that is the explanation given by WellPoint
President and CEO Angela Braly to HHS Secretary Sebelius when
asked to explain skyrocketing premium increases in California.
There are not enough healthy people in Anthem Blue Cross/Blue
Shield individual market and 39 percent premium increase is
necessary for Anthem to continue to provide coverage in that
area. The data emerges from the National Association of
Insurance Commissioners clearly showing that enrollment in
Anthem BCBS in California increased from 583,967 individual
policies at the end of 2008 to 627,082 individual policies at
the end of the third quarter of 2009. That is an increase of
over 7 percent in the individual market for Anthem in
California alone, so a high rate increase because of reduced
pool doesn't make sense.
It appears to me that the insurance industry's dirty little
secret drastically increasing individual policy rates without
justification and running rough shod over consumers has finally
been given the public attention it deserves. Companies and
Anthem Blue Cross/Blue Shield has been trying to get away with
these outrageous type increases in Michigan, Rhode Island,
Washington, and Maine, just a few. Unfortunately, states like
Texas have very little we can do to prevent these rate
increases going into effect, and are often at the mercy of the
insurance companies, and that is historically true in Texas.
Today, we are finally telling the insurance industry that the
party is over. You have been making astronomical profits in the
individual market off the backs of the sick and working folks
who don't have an option but to obtain health insurance, but in
the individual market it has gone on too long.
Both the House and Senate reform bills contain provisions
to give state and HHS Secretary the ability to review health
insurance premium increases and the President's proposal takes
this one step further by creating oversight of insurance
premiums at the federal level. If individuals continue and
cannot afford health insurance they end up in the emergency
room forcing the health care system and the taxpayer to pay for
their expenses, yet the insurance companies continue to see
increased profits while making it nearly impossible for
individuals to gain access or to afford a policy.
These hearings highlight we desperately need insurance
reform and health insurance reform in our country. All
individuals should have access to quality and affordable health
insurance. And, Mr. Chairman, we are not seeing that in our
country. Otherwise, insurance reform wouldn't be needed, but we
know in my particular district 43 percent of my constituents
who are working don't have insurance through employers so they
don't have a group plan so they have to go to the individual
market, and I yield back my time.
Mr. Stupak. Mr. Markey, for an opening statement.
OPENING STATEMENT OF HON. EDWARD J. MARKEY, A REPRESENTATIVE IN
CONGRESS FROM THE COMMONWEALTH OF MASSACHUSETTS
Mr. Markey. Thank you, Mr. Chairman, very much. Many people
think that health insurance reform doesn't matter to them
because they already have health insurance. Skyrocketing
premiums and insurance company abuses, however, reveal a
different story. Medical bills are the leading cause of
personal bankruptcies in the United States today. In 2009, 60
percent of all people who declared personal bankruptcy did so
because of their medical bills, and 80 percent of those people
actually had health insurance. They just weren't covered or
what it was that ultimately came to become the disease that
affected them or their family. People just discovered they
weren't covered.
It is appalling that over the coming weeks and months when
many Americans sit down to pay their bills, they will open a
letter from their health insurance company informing them that
their premiums will increase by 14, 22 or even 39 percent. Last
week, I spoke with a small retail business owner named Diane
Otnesio from Woburn, Massachusetts in my district. She recently
got a letter from her insurance company saying that her health
insurance premium is jumping 32 percent from $494 per month to
$652, and her husband had the same increase. So this is
essentially a 30 percent increase, and she says to me
personally my small business is struggling to survive and I am
expected to pay an extra $158 for the same health plan. It is
making an already difficult economic situation even worse.
People like Ms. Otnesio are doing the right thing and
faithfully paying their health insurance premiums, but it is
becoming increasingly difficult when some insurance companies
are jacking up premiums and experiencing huge profits. In the
midst of this economic crisis, WellPoint, the parent company of
Anthem Blue Cross, recorded a $2.3 billion increase in annual
profits. That is a 91 percent increase compared to the company
profits in 2008. Did that jump in profits mean that WellPoint
covered more of their customers' medical costs? No. In fact,
their contribution to medical expenses of their customers
decreased by 1 percent. Did this rise in profits lead to an
appropriate reduction in premiums? No. Anthem Blue Cross is
considering raising individual health insurance premiums by as
much as 39 percent.
And, sadly, Anthem Blue Cross is not an isolate case. Last
week, Health and Human Services Secretary Sebelius released a
report showing that health insurance companies in 6 other
states proposed outrageous increases in health insurance
premiums. There could not be a more important hearing, Mr.
Chairman. I thank you for having it. It goes right to the heart
of the anxiety that millions of Americans all across our
country are feeling right now as we sit here in this hearing
room. Thank you.
Mr. Stupak. Thank you, Mr. Markey. Ms. Christensen, for an
opening statement, 3 minutes, please.
OPENING STATEMENT OF HON. DONNA M. CHRISTENSEN, A
REPRESENTATIVE IN CONGRESS FROM THE VIRGIN ISLANDS
Mrs. Christensen. Thank you, Mr. Chairman. Amid the reports
of record breaking profits in the insurance industry almost 3
million more people in this country lost their coverage. So I
want to thank you, Chairman Stupak and Ranking Member Burgess,
for having this oversight hearing on what proposes to be an
extreme increase in insurance premiums. This morning, we are
looking at what is happening in California but premium
increases every year, year after year, are hurting American
families and increasing the ranks of the uninsured, exactly the
opposite direction this country ought to be moving in. Over the
years, I have worked with WellPoint, and I applaud the work
that they have done in diversity and wellness programs and
other areas, but I am alarmed by the proposed 39 percent
increase in premiums.
Despite the reasons that they offer, I do not see that they
support the need for these premium increases, and I cannot
support them. WellPoint is among the big 5 who enjoyed a
combined profit of $12.2 billion last year. I don't grudge them
the profits. They are in the business to achieve profits, but
ordinary folks, your clients and others, are having to make
unsustainable sacrifices to keep health insurance and to make
ends meet. I cannot see why keeping the premiums where they
are, having been raised about 20 percent last year, would be an
even comparable sacrifice for WellPoint or its shareholders
because as I see it they would still realize substantial
profits.
We welcome WellPoint's support for health care reform.
Indeed, in a very real way this Congress' failure to pass
meaningful legislation such as we passed in this committee last
year is a major part of the problem we are discussing today. It
is time for our Republican colleagues to stop blocking what we
and the other committees passed at the long hearings and
markups and which everyone was involved. So anyone who goes to
the White House tomorrow without a determination to insure
everyone, to provide equitable health care to everyone,
including those living in the territories, and reduce health
care costs should get out of the way and let others who will do
what has to be done sit in their chair.
If there is anything that WellPoint and those of us on this
side of the dais can agree on, it is that we might not be here
having this hearing today if the President had signed the kind
of legislation this House passed last year. I want to welcome
those who are here to testify this morning, both the customers
of WellPoint and the officials of WellPoint, and I look forward
to your testimony.
Mr. Stupak. Thank you. Mr. Welch, for an opening statement.
He stepped out. Ms. Sutton, opening statement.
OPENING STATEMENT OF HON. BETTY SUTTON, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF OHIO
Ms. Sutton. Thank you, Mr. Chairman. Thanks for holding
this hearing today. I would like to be able to say that I am
shocked that we are talking about this, but sadly I am not.
While I understand that this hearing focuses primarily on
Anthem Blue Cross in the California market unfortunately as we
heard here the situation is not unique. Across this country
millions of Americans, affecting both individuals and
businesses, are being devastated by shocking increases in their
health insurance premiums. And let us be clear, health
insurance companies have been socking it to the American people
and businesses for years. Health Care for America Now recently
released a report that found that in 2009 the health insurance
industry had record profits.
Let us just think about that. In 2009, a year when the
average American family suffered unlike any year in recent
history, health insurance companies still had record profits.
And according to the report the 5 biggest for-profit health
insurance plans had combined profits of $12.2 billion in 2009,
up 56 percent from the year before. According to a Health and
Human Services report, over the last 9 years profits at the
largest insurance companies increased 10 times faster than
inflation, and over the last decade the amount private
insurance companies spend on administrative costs,
administrative costs, instead of paying claims and covering
care, the amount that they spent on administrative costs grew
faster than the amount they spent on prescription drugs as
well.
Premiums continue to skyrocket but consumers don't receive
additional benefits or care. These increased premiums mean
families have to make untenable choices. They are forced to sit
down and weigh their chances of getting cancer or getting hit
by a bus against having to pay an insurance premium that is now
suddenly 30 percent higher, sometimes higher than their
mortgage. Choosing to pay the higher premium means they may not
be able to pay their heating bill or other basic life
necessities or send their children to college, or sometimes it
means choosing, if you can even call it a choice, to not have
health insurance. This is not a situation that should occur in
the United States of America.
And this why we have heard a lot about health care reform.
The Affordable Health Care for America Act that was passed by
the House contained an 85 percent medical loss ratio, which
would require insurance companies like Anthem Blue Cross,
WellPoint, to be held accountable to consumers when they do not
spend enough of their premium revenue on actual health
benefits. The days of health insurance companies putting
profits before people need to be over. I am sad that we are
sitting here to discuss this today but the American people,
they need answers, and it is time for WellPoint to explain why
they are raising premiums in this way, especially right now.
And I yield back.
Mr. Stupak. Thank you. Mr. Welch is here. Opening
statement.
OPENING STATEMENT OF HON. PETER WELCH, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF VERMONT
Mr. Welch. Thank you, Mr. Chairman. These premium increase
requests really are just the latest effort on the part of the
insurance industry to preserve and protect its business model,
and it is a business model that served them extremely well with
record profits and record salaries but has imposed real harsh
consequences on individuals in America and our businesses that
are trying to provide health care to their citizens. It is not
sustainable. There is nothing really to talk about. How
possibly can a family or a business cope with an envelope that
arrives telling them that the cost of health care is going to
increase 40 percent. And Anthem, WellPoint, always has an
excuse, always has an explanation, that is ``the cost of health
care.'' But essentially what the insurance industry has done,
unfortunately, with a good degree of success, is block any
systemic reform which this country needs in order to have a
health care system that is affordable and accessible.
It is pretty astonishing when you look at what the premium
increases has been, 26 percent between 2003 and 2008 for single
policies, 33 percent for family policies. The 10 largest health
insurers saw their profits balloon from $2.4 billion to $13
billion in 2007. And as the member from Ohio was saying, the
amount paid to health providers has gone from 95 percent in
some cases to 74 percent. That has enabled some companies to
pay executive salaries in the range of $24 million. In my own
small state of Vermont when the CEO of Blue Cross left, he got
a $7.2 million golden parachute. That came out of rate
increases. It came out of businesses that were struggling with
the decision about whether they were going to cut workers or
cut their benefits, a decision our employers don't want to
make.
So if I have a complaint about the insurance industry, it
is not the individual rate increases. It is the consistent
effort to stand in the way of health care reform so that the
folks in this country, the businesses in this country, can have
some confidence that they are going to get affordable and
accessible health care. Health care is not about being in
service of the insurance industry. The insurance industry
should be about being in the service of helping us have access
to health care. I yield back. Thank you, Mr. Chairman.
Mr. Stupak. Thank you, Mr. Welch. Last, but not least, Ms.
Schakowsky, opening statement, please.
OPENING STATEMENT OF HON. JANICE D. SCHAKOWSKY, A
REPRESENTATIVE IN CONGRESS FROM THE STATE OF ILLINOIS
Ms. Schakowsky. Thank you, Mr. Chairman. When I saw the
latest stories out of California about Anthem Blue Cross'
decision to raise rates, I knew, my constituents knew, this is
not an isolated incident. It is just the most recent example of
what the insurance companies are doing to policy holders across
the country. This committee has known for some time that
arbitrary rate increases are a real threat to health access.
Last summer, 12 of my colleagues and I successfully offered an
amendment to the health reform bill to prevent excessive
premium hikes like the one we now see from Anthem. We passed
legislation requiring prior approval of large rate increases.
And I am glad the President has now called for strong rate
review regulation in his proposal for comprehensive reform, and
I look forward to ensuring that what started as an amendment in
this committee becomes law.
I have heard from my constituents in my district asking
that we not limit our investigation to California or to Anthem.
They have sent me policy statements and renewal notifications
highlighting years of high premiums. They have described the
tough choices they have had to make, agreeing to high
deductibles in an effort to maintain coverage, and yet the
increases keep coming and coming. Illinois, like 25 other
states, does not require prior rate approval of premium
increases, and there is no authority to reject or deny
excessive rate increases. So my constituents are turning to me,
to Congress, to act to protect them.
In addition to those stories, I have heard cases from my
district showing that these trends are not confined to the
individual market. From a community health center in my
district in the process of renewing their Blue Cross/Blue
Shield group policy, they are looking at an across the board
double digit premium hike this year, and they are being forced
to pay higher co-pays for things like emergency room visits or
to see a specialist. Congress has taken repeated action to
increase funding for community health centers. That money was
intended to provide quality access to health care for our most
vulnerable populations, not to pay insurance company premium
hikes.
Families are forced to make extremely tough choices when
faced with an unexpected 39 percent increase in their budget
and their personal stories only emphasize the need for
comprehensive health reform that brings greater access and
affordability to our health care system. I would like to close
by thanking the witnesses for their participation in today's
hearing and look forward to their testimony. I yield back.
Mr. Stupak. Thank you. That concludes the opening
statements from all members of the subcommittee. I should note,
and I appreciate the fact, that Ms. Eshoo from California is
here, and I am sure when we get to questions she will probably
have a question or two. And Ms. Capps was also here, who just
had to step out. As I said, we have two hearings going, one on
the third floor and one here, and members are going back and
forth. But members of the full committee of the Energy and
Commerce Committee who may not be a member of this subcommittee
will be allowed to ask questions at a later time of witnesses.
So that concludes the opening statement by members of the
subcommittee.
We have our first panel of witnesses before us. They are
Lauren Meister, who is from West Hollywood, California, Ms.
Julie Henriksen, who is from Los Angeles, California; and Mr.
Jeremy Arnold, who is also from Los Angeles, California. It is
the policy of this subcommittee to take all testimony under
oath. Please be advised by the rules of the House that you are
allowed to be advised by counsel during your testimony. Do you
wish to be represented or advised by counsel during your
testimony, any of our witnesses? All shaking their heads no, so
we will take that as a no. Therefore, I am going to ask you to
please rise and raise you right hand and take the oath.
[Witnesses sworn.]
Mr. Stupak. Let the record reflect that the witnesses have
replied in the affirmative. They are now under oath and they
will begin with an opening statement. I would ask Mr. Arnold if
you would not mind going first. Pull that mike up, press a
button, the green light should go on, and you need to keep that
mike fairly close to your voice in order to project your voice.
Begin, please.
TESTIMONY OF JEREMY ARNOLD, LOS ANGELES, CALIFORNIA; JULIE
HENRIKSEN, WESTCHESTER, CALIFORNIA; AND LAUREN MEISTER, WEST
HOLLYWOOD, CALIFORNIA
TESTIMONY OF JEREMY ARNOLD
Mr. Arnold. Thank you. Good morning, Mr. Chairman, and
members of the committee. I am an Anthem Blue Cross policy
holder, who has been directly impacted by Anthem's astonishing
proposed rate increases in California. Because I work as a
self-employed writer and also have an additional part-time job,
I have had to purchase individual health insurance. Two weeks
ago, Anthem informed me that the premiums on my rate plan PPO
40 policy were going up 38 percent from $231 to $319 a month.
This follows an increase exactly 1 year ago of 26 percent when
my rates went up from 183 to 231 a month. In other words, my
premiums are poised to rise to a level that is a whopping 74
percent higher than barely over a year ago.
This is outrageous. My benefits have not improved in any
way, and I don't go to the doctor that often. Last year, I went
a handful of times and paid about $1,250 in medical bills. As
per the terms of my policy, Anthem paid a balance of about
$1,600 in claims, far below the $2,700 in premiums I paid
Anthem. I did also take prescription drugs, including a generic
and a brand name medication, to manage high cholesterol and
blood pressure related to a mild heart condition that I
developed after I joined Anthem. Those 2009 drug costs were
subject to a separate $500 brand name deductible.
In its notice to me last month, Anthem offered to switch me
to a plan with a lower increase in premiums, but one which does
not include brand name drug coverage. That is unacceptable to
me since I need that coverage to treat my condition. There are
other Anthem plans I could try to switch to. Some of these
require underwriting in which case my pre-existing condition
would probably make me ineligible. Some don't require
underwriting but carry high deductibles, lower lifetime
maximums, and very poor prescription drug coverage. If Anthem
goes ahead with its desired rate increase, I will not only be
driven to one of these high deductible policies, I will have to
hope that I don't get sick or injured. Hope is not an effective
health care policy and hope is not what Anthem is supposed to
be selling. I eat right. I exercise. I take care of myself. I
am generally a healthy person and I resent being squeezed in
this way.
Anthem tries to justify these rate hikes by citing rising
medical costs. This is disingenuous. If insurance companies
believe that medical costs are out of control, they should
fight them rather than simply passing them off to ordinary
Americans. Anthem and WellPoint's recent astronomical profits
are repellants because they are at the expense of breaking the
backs of people like me. I have no problem with corporate
profit making, but I do have a problem with profiteering,
especially when it is at a level that penetrates so far into
the economic and social well-being of our country that we
Americans are discouraged from pursuing dreams and starting
businesses and are stuck in undesired jobs simply because we
worry about losing our health insurance or being able to afford
it for our employees.
This is wrong. It is insane, and it must be fixed by doing
whatever it takes to pass meaningful health reform now. It
would be simplistic to think that Anthem's corporate greed is
the only problem here though it is a huge one that I believe
requires stringent regulation. Sharing the blame are indeed
hospitals and doctors raising rates far above what is
defensible, and a legislature that is too beholding to special
interests and consumed with partisan rhetoric to take necessary
action. All these parties feed off each other to conveniently
and happily line their own pockets or win elections while
blaming the other side and caring not a wit about the rest of
it.
In conclusion, I want to say to Anthem and the insurance
companies, including WellPoint President Angela Braly, to
hospitals and medical providers, and to legislators on both
sides of the aisle, I ask you all in words that are as true
today as they were in 1953 when Joseph Welch first said them,
have you no sense of decency at long last, have you left no
sense of decency? Thank you.
[The prepared statement of Mr. Arnold follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Stupak. Thank you, Mr. Arnold. Ms. Henriksen, your
opening statement, please.
TESTIMONY OF JULIE HENRIKSEN
Ms. Henriksen. Good morning, Chairman Stupak, Chairman
Waxman and members of the committee. I first would like to say
that I am honored and more so extremely encouraged with the
invitation to come before the subcommittee to present my real
life situation regarding the most recent premium increase of my
Anthem Blue Cross individual health insurance policy. The new
found urgency and the spirit of determination with which these
hearings are taking place give me a tremendous amount of hope
that the issue of health care reform is going to remain an
enormous focus of attention until a solution is found
satisfactory to all. A little about myself and my particular
case. I am 54 years old. I have two teenage sons, Keaton, who
just turned 18 years old and is heading to college next year,
and Britton, who is 16 years old and a junior in high school. I
am self-employed as a consultant in the field of architecture
and interior design, specializing in hotel design.
I have worked continuously in this field for approximately
27 years now. I make fairly good money, and both my boys attend
private school. I have held a Blue Cross individual family
policy since owning my own small business. My current policy is
called a PPO share plan designated with a $1,500 deductible. My
monthly premium is $1,042 covering the three of us. Dated
January 26, I received a letter with a booklet attached stating
that on March 1 of this year, my monthly premium would be
raised to $1,352 for the same policy. This is an increase of
$310 per month or a 29.8 percent increase.
Just to clarify, my current policy states that I must meet
an annual $1,500 deductible for each two members of my family
which totals 3,000, and an annual out-of-pocket expense of
4,500 for two members of my family, which totals 9,000 in
addition to the yearly premium of $12,504 that I pay already. I
have to tell you that we have never even met the deductible
each year. All three of us are very, very lucky to be very
healthy. But what is most concerning to me is that I am held
captive in this policy since my younger son, Britton, was born
with a heart condition. Not discovered until age 3, he was born
with a small hole in his heart about the size of a dime between
his right and left atrium.
In addition, he has a condition called a cleft mitral
valve, which means that the flap that opens and closes to allow
blood to flow from the atrium to the rest of the body does not
shut properly. Rather it swings back into the atrium and in so
doing allows a small amount of blood to flow back into the
heart with each beat. He had surgery when he was 3-1/2 years
old, which repaired the hole in his heart. At the same time the
mitral valve was corrected to the extent that it is
characterized as a mild leak. The flap of the valve needs to
move back and forth so it can only be cinched so far to correct
a leak. He is seen by a pediatric cardiologist once a year for
an ultrasound and an echocardiogram just to make sure that the
leak has not changed from mild to moderate or severe. He is
extremely healthy and is in no way hindered with any symptoms
or restrictions when it comes to sports exercise. In fact, he
is on his school's tennis team and has played sports of all
kinds all his life.
The reason that I am held captive, so to speak, is because
he has in insurance terms a pre-existing condition. Sadly, I am
allowed the so-called privilege of staying with Anthem Blue
Cross and paying exorbitantly unreasonable premium hikes each
year until I can't pay them anymore. In the same written notice
by Anthem, I was offered a downgrade to my policy to an annual
$2,500 deductible for each member with a 5,000 annual out-of-
pocket amount for each member at a cost of 1,089 per month, an
additional increase of $47 to my current 1,042. I am allowed to
downgrade until the term change in policy takes place and then
involves the active underwriting, which I do not want to
happen.
I should note here that if I were to accept this new
monthly premium of $1,352, thereby retaining my same current
policy, this amount would be shy just $92 of my monthly home
mortgage payment, which I refinanced this past summer. What
worries me most is what will it be like for my son when he is
22 years of age, and I am no longer able to claim him as a
dependent on my taxes. Will he be excluded from any kind of
policy because of his unforeseen heart condition when he was
born?
I must tell you that I have never written to any government
officials or office before this, and though my letter, just
another amongst many in the storm of shock and outcry about
Anthem's premium increases, but I felt so compelled to do so
for the very reason stated above, and the fact that in this
economically depressed environment, I find the act of Anthem
Blue Cross raising premium costs to individual policy holders
for such high amounts truly unconscionable. Not to make light
of the situation, but if I were to send out a letter today in
my industry stating that I was raising my hourly consultant
rate by almost 30 percent, I would not be working.
To conclude, I find that even with all the disagreements in
Congress regarding the latest health care reform proposals
amazingly, I really still do have a positive outlook that our
government officials can come up with a workable solution to
the obvious and urgent need to change the direction of the
health care in this country. I thank you for the opportunity to
be heard.
[The prepared statement of Ms. Henriksen follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Stupak. Thank you. Ms. Meister.
TESTIMONY OF LAUREN MEISTER
Ms. Meister. Good morning. Lauren Meister, West Hollywood.
Thank you for inviting me to speak today. I have been an
individual plan member of Blue Cross of California, now Anthem,
for over 17 years. I have always dealt with the company
directly, not through an agent. Like many people, in 2008 my
income dropped substantially. I was paying a $500 monthly
premium for Anthem's PPO 500 plan. I called Anthem in December
of '08 to see what other less expensive plans were available. I
expected the plan would have a higher deductible or co-pay but
would still have the basic necessary coverage.
The Anthem rep was aware of my budget, my medical history
and age. I was turning 49. She recommended Anthem's PPO 1500
plan, which was about $1,000 less per year, so I switched. Just
a few months later, I received a notice from James Oatman, VP
and General Manager of Anthem Blue Cross Individual that rates
for the PPO 1500 plan were being increased on March of '09, and
that the new monthly premium would be 528, even higher than
what I had been paying for the PPO 500 plan but with less
coverage. I paid the new premium until I spoke with friends
about their plans. In October, I called Anthem again and asked
them how the PPO 40 plan with Brand RX coverage differed from
the PPO 1500 plan, which they had recommended to me in '08.
I was told by this Anthem rep that the PPO 40 plan had a
lower monthly premium, no deductible and higher co-pay, but the
main difference was it did not cover maternity, which at 49 I
probably didn't need anyway, so I switched plans again. At 49,
I had been paying for maternity coverage, a costly, unnecessary
benefit. I thought Anthem execs should know, so I wrote a
letter to James Oatman, and I copied Ms. Angela Brawley, Ben
Singer, Director of PR for Anthem Blue Cross of California, as
well as Senator Boxer and Congressman Waxman. The only response
I received was from Congressman Waxman. In January, 2010, James
Oatman finally did send me a letter but this was to inform me
that my rates were being raised once again from 373 to 516 per
month, an increase of 38 percent.
The letter noted that I would also have the option to
change to PPO 40 plan with generic RX coverage only. This
alternate plan would increase my premium by only 16 percent as
if the 16 percent increase was a great savings. I have allergy
asthma and I take brand prescriptions Accolate, Aerobid and
Symbicort. Symbicort is fairly new. Accolate will not be
generic until probably 2011. Hopefully, I can hold my breath
until then literally. For the record, with the proper
medication my breathing capacity is nearly 100 percent, but
without the proper medication, I may end up needing more health
care services, which ultimately will increase medical costs for
both me and my provider.
Pre-existing conditions such as asthma limit one's chances
of being able to switch to a different health care provider,
particularly if the goal is to lower the cost of the premium
and still maintain coverage. This is only one of many reasons
why we need health care reform. I read that Anthem's
explanation for increasing rates by up to 39 percent was rising
medical costs. In one respect, Anthem is right. It shouldn't
cost $20 for a hospital to administer an aspirin, but then
Anthem's executive salaries and stockholders do not appear to
be suffering, and how much money goes to lobbyists trying to
prevent health care reform, the same reform that Anthem
indicates is necessary to keep health care costs from rising.
My issue with Anthem is shared by many and is just a
symptom of a broken system. We have a system where prevention
and wellness are not encouraged nor embraced. For example,
because I was turning 50, my doctor prescribed a bone density
test for baseline measurement. Anthem Blue Cross did not cover
one nickel of the test even though that test could determine if
I had a propensity for osteoporosis. Penny wise, pound foolish.
It is obvious. The health care industry needs to be regulated.
We saw what the regulation did to the cost of utilities in
California. We saw what the lack of regulation has done on a
global level to our financial and banking systems. Well, it is
having the same effect on our health care system.
If the City of West Hollywood where I live can regulate how
much landlords can raise the rent each year to keep rents
stabilized, why can't the federal government regulate how much
insurance companies can raise their rates per year in order to
stabilize premiums. I believe that we should all be able to buy
health care coverage. If someone can afford to pay for private
insurance, great, but, if not, there has got to be a public,
not-for-profit alternative without having to move to Canada,
England or France. Some representatives from Congress have
stated that we don't need a public option. I say to them I just
want what you have, nothing more and nothing less. To me,
insurance is like marriage. You expect the insurer to be with
you in sickness and in health. That is why we buy insurance.
If the insurer can't live up to this expectation then
perhaps they need to get out of the business of insuring. I
also want to just reply that I am an American, and I support
Obama's health plan, and I just wanted to make that clear.
Thank you.
[The prepared statement of Ms. Meister follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Stupak. Thank you, and thank you all for your testimony
and for coming here today. We are going to start with
questions. We will start with the chairman of the full
committee, Mr. Waxman, for questions, please.
Mr. Waxman. Thank you very much. I appreciate the testimony
each of you has given. Ms. Meister, you indicated you are a
constituent. I don't know if the other two witnesses are also
constituents because you are from LA . I do know that WellPoint
is a constituent of mine as well. And I want to do what is
right for all my constituents, but it is not right to have
insurance companies deal with ever increasing costs by shifting
those costs onto the beneficiaries, their customers, because
that is what they are doing. If you have a brand name drug,
they won't cover it. You have to pay for it if you want it. If
you want insurance, they figure out a way to increase your
rates to keep the policy you already have. This is the problem
with individual insurance.
What we have as federal employees is we can choose between
a number of different plans and they can't turn us down and
they can't charge us more if we have pre-existing medical
conditions. We get coverage because the costs are spread among
all the insured. That is true of federal employees, members of
Congress, for a lot of people that work for large employers
that provide coverage, but the 3 of you are not in that
situation. You have your own business. You have part-time jobs.
You have your own activities, so you have to go in the
individual market. Those are the people for the most part who
don't have insurance coverage because they can't afford it, and
it looks like you may not have insurance coverage yourselves if
you don't pay these increased rates or they give you another
alternative.
WellPoint lets you go into another plan that costs more and
covers less. What a deal. It doesn't hold down the cost of
care. It simply makes you have to pay more of it, but that is
not what you want from insurance. You want insurance to cover
at least their share of the cost, and you would also like them
to negotiate better prices to hold down health care costs
overall. I don't see any evidence of holding down costs except
shifting them on to you. Let us look at this situation that you
are facing.
Ms. Meister, you talked about your current plan. You have a
PPO. You have to pay a percentage of your medical costs and you
use a brand name drug as well as generic medications after you
meet your deductible. Is that a correct statement of the plan
you have generally?
Ms. Meister. Yes, and the brand drugs only come--they don't
come in generic.
Mr. Waxman. So you can't get a generic for those where you
need the brand name drugs. You told us in your opening
statement you take your medication to treat chronic asthma.
These are not in generic form, so if you go along with what you
are being told by Anthem, you would have to switch to a plan
with inferior coverage or attempt to pay the higher monthly
premium. That is the way they have got you in the squeeze,
isn't it?
Ms. Meister. That is correct.
Mr. Waxman. Have you decided what you are going to do?
Ms. Meister. I have decided that I am going to take the
lower coverage with the generic brand and I will pay out of
pocket for the brand medication.
Mr. Waxman. And, Mr. Arnold, you have the same health
insurance plan as Ms. Meister, and they propose to increase
your cost by 38 percent as well, or you can switch to a plan
that covers generic medications only, is that right?
Mr. Arnold. That is correct, or I could switch to a plan
that also covers brand name but one that has a much higher
deductible over all.
Mr. Waxman. And faced with this kind of a problem, you have
got a terrible choice to make. Have you decided what choice you
are going to make?
Mr. Arnold. At the moment, I am in a wait and see attitude
because I know that these proposed increases have been put on
hold until May 1, but if nothing changes I will probably switch
to one of the very high deductible policies.
Mr. Waxman. And they would be very happy because they is
what they would like you to do. Then you would just have to pay
more of your costs. Mr. Chairman, these witnesses made clear
that the alternative plans Anthem is offering to its policy
holders provide dramatically less coverage for marginally less
money, and if the only option available to consumers in the
individual market is to pay outrageous monthly premiums or
switch to a plan that doesn't meet their needs, then it is
another example of why we need reforms in the individual
market. All of us here will say we care about this. We want to
have insurance reforms. That is what we are told.
But you can't reform the insurance system without providing
some standard policy so you can compare policies. You have such
arbitrariness in the kinds of policies that you have available
to you, and you can't really figure out what your needs are
because from year to year it changes and it goes up. What we
need is for insurance companies to have to provide insurance
for everybody and spread those costs, and to do that we have to
make sure that everybody is covered, and to make sure that
everybody is covered we have to help people who can't afford
their coverage, and we have to tell the insurance companies
they can't deny you that coverage.
That is where we find our differences as we try to deal
with health reform. We have got to deal with the problem in a
broader way than say, oh, let us do away with pre-existing
conditions where the Republican proposal doesn't even do that.
They would put people with pre-existing conditions in a special
group where they would pay higher premiums and they would be
treated differently. We have got to standardize insurance and
make sure that people have access to it. That is what President
Obama has been trying to do.
We are going to go to a summit tomorrow that the President
has called for the Democrats and Republicans. I hope we can
work on this in a bipartisan basis. This shouldn't be a
Democratic or Republican issue, but we will see tomorrow
whether we can look for common ground rather than hear the
accusations back and forth that we want to socialize medicine
or we are going to create death panels or we are cutting back
on people and the elderly, and then yet we find lack of
cooperation to find a solution to this intractable problem. I
hope we don't let another opportunity go by and wait another 15
years before we tackle the problem again. You can't afford it,
and the American people can't afford it either. Thank you, Mr.
Chairman.
Mr. Stupak. Mr. Burgess for questions, please, 5 minutes.
Mr. Burgess. Thank you, Mr. Chairman. In the interest of
bipartisanship and comity, I feel that I need to respond to
some of the lectures that we have been getting this morning.
Mr. Chairman, and referring to Mr. Waxman as the chairman of
the full committee, I would be offended as chairman of the
committee if the committee passes a bill and the Senate passes
this bill I didn't like, but fair enough, the Senate passes a
bill, a bill I didn't like that was starkly different from this
committee's bill, but nevertheless they did what they intended
to do, and then the proper process is for the two sides to get
together, House and Senate, I am talking about, not Republicans
and Democrats, but the House and Senate to get together and
reconcile the differences in what is called a conference
report, and this is part of our normal procedure.
But now we have a situation where the White House
functioned as the conference with no input that I am aware of
from yourself or Mr. Stupak or Mr. Rangel or Mr. Miller as
chairman of the Education and Work Force Committee, the White
House put together this conference report and now we will be
required at some point to vote on that and deal with it through
a process called reconciliation which is a little arcane, but
it means you don't have to have quite so many supporters to get
this done. And if the American people were behind what we were
doing, it wouldn't be this difficult.
Now you can look at polls however you want, but 60 percent
of the American people don't like what we are doing. Twenty
percent of the people are in favor of Congress generally and 45
percent of the people are in favor of the President, so with
these sorts of numbers it is difficult to do something this
massive in the form of restructuring. Now just another issue
that you made. You brought up the federal employee health
benefits plan. It is employer-sponsored insurance so it doesn't
exactly translate to what we are talking about here today, but
had we worked more on making the individual market look more
like the ARISA protected market under employer-sponsored
insurance the multi-state corporations that provide insurance
to their employees across the country that aren't holding to
things like state lines perhaps we could have delivered
something that was meaningful for someone in the individual
market.
I have been in the individual market. I know that it is
sometimes tough to find the plan you want. I have had adult
children in the individual market. I have had to keep up with
things that they chose not to but I thought was important. We
do have regulation in the individual market. It occurs at the
state level right now. It may be a bad thing. Maybe it needs to
be a the national level, but, you know, when I just looked
through the federal employee health benefits plan book, I get a
better deal because my residence is in Texas than I would in
California, and certainly a better deal than I would get in New
Jersey, so maybe I don't want a national regulator who is going
to base everything on an area that is really not germane to
where I live, so we do have to be sensitive to the fact that
the states are different.
Now we passed a bill twice in the 108th and 109th Congress
that would have allowed aggregations of small businesses across
state lines, so-called association health plans. The reason
there is not pre-existing conditions in the federal employee
health benefits plan is not because we set up something that is
better for ourselves. It is because the pool is so big, there
are so many federal employees, which may be a good thing or a
bad thing, we could argue about that, but there are so many
federal employees that the pool is so large that pre-existing
conditions actually don't enter into the equation. What we
could do for writers across the country, for example, or
architects across the country, let every architect buy into an
association plan where all the other architects buy into it,
realtors, whatever kind of association you want to make, and
suddenly you have got a pool that has the market share of a
company like Verizon that has employees in all states in the
union and buys insurance for them.
Mr. Arnold, I think you brought up about the affordability
of the premium, and I don't know your income and I am not going
to ask you, but have you looked at the House-passed bill and
calculated what your premium would be?
Mr. Arnold. No.
Mr. Burgess. The House-passed bill, and I am not lecturing
you here, I want to make you aware, the House-passed bill is a
good deal for someone who is unemployed and has no insurance.
It provides access that has never existed in the past. Your
premium under the House-passed bill, and again I don't know how
much you make and I am not going to ask you to tell us, but for
someone who makes at 350 percent of the federal poverty level
the annual premium, the annual premium would be right at $4,200
a year, so a little bit more than what you are paying right
now.
Now 350 percent of the federal poverty level is a good
salary. I don't know how it works out with California cost of
living. But it is just a little under $38,000 a year for a
single individual. I don't know whether you are married or not,
and again I am not going to ask you. But just to point out
that, yes, you have brought up a significant point that we need
to pay attention to, that your premium has increased
significantly under Anthem, and we are going to ask Anthem to
justify what they have done in the California market.
But I do want you to understand that with the House-passed
bill that not everyone in your situation, depending upon
income, someone who earns 400 percent of the federal poverty
level, which is $43,000 a year, would be paying $5,400 in
annual premium as a single individual in the government option,
in the House-passed plan. Only 2 rating bands for younger and
older, no tobacco rating, so there are some things in the
House-passed bill that might not improve affordability in your
situation, and that is really what we are talking about here
because Anthem has affected the affordability of your policy. I
would give anything to know, Ms. Meister, what you are going to
be charged for your bone density. I won't ask you, but I will
also suggest that I think your doctor was right to recommend
it. And if your doctor recommended it when you were 65 years of
age, yes, it would be covered under Medicare but your doctor
would only be paid $40 for the privilege of providing you that
service.
Again, I don't know what your doctor was proposing to
charge you. I suspect it was more than $40 but I don't know
that. After you turn 65 under the big public option that we now
call Medicare if your doctor charged you more than $40 for that
procedure, my cost is $200----
Mr. Stupak. The gentleman's time has expired.
Mr. Burgess [continuing]. Your doctor would be violating
the law to charge you the additional. So we will give up some
things if we go with the House-based bill. That is why it is so
important for us to get it right. That is why it is so
important for us to go through regular order and not let the
White House subsume the duties of the conference committee----
Mr. Stupak. The gentleman's time has expired.
Mr. Burgess [continuing]. Which is, unfortunately what has
happened now. I told you you would regret having me here.
Mr. Stupak. No, Mike. I have sat in this chair a long time
and I have listened to you forever, and I know you always go
over. I know I have to be diligent. I know I have to keep on
you. I feel sorry for these witnesses because they are self-
employed. They took time off of their jobs probably at a loss
of money to come and give us the courtesy of asking them
questions, and you never asked them a question. So I feel sorry
for our witnesses.
Mr. Burgess. I supplied them with valuable information they
couldn't have gotten any other place.
Mr. Stupak. Yes. Well, it is amazing. It is my turn for
questions. Let me just say a couple things. This committee,
this subcommittee in the last 3 years have held hearings on
under insured, on rescissions, on purging of small businesses.
And I asked for this hearing. As I said in my opening, Michigan
proposed a 56 percent rate increase. And I would have liked to
have had this hearing in LA. We have had hearings in Indiana. I
will go anywhere in the country to hold hearings on health care
because I think that consumers in this country are being
bankrupt by health insurance, and I want to see health
insurance passed. And the reason for this hearing--and it is a
coincidence. When we set this hearing, when we were doing
things, we didn't know the White House was going to do a summit
on health insurance. But I will go anywhere with this
subcommittee. I will go to any district and hold these hearings
because I think they are valuable.
And when Michigan proposed a 56 percent increase for our
people, I have the e-mails that they finally settled at 30 to
39 percent increase for these small business people, much like
the panel we have here today, and people just can't afford it.
We are all truly one injury or one illness away from
bankruptcy. But let me ask this question. Yesterday we did a
hearing on Toyota, and 10 years ago if I would have bought a
car and I buy one now today, I get all kinds of extra bells and
whistles whether it is a Toyota, a General Motors, whatever it
might be. Mr. Arnold, Ms. Henriksen, Ms. Meister, has your
insurance given you more bells and whistles as you have seen
these increases?
Mr. Arnold, yours went up 74 percent in the last 2 years.
Ms. Henriksen, I see premiums increased about by the time you
do your premium, your deductible, and your out-of-pocket, that
is about $31,000 before you even start tapping into anything.
And, Ms. Meister, you are just trying to keep your drugs that
will keep you breathing. Have you seen increases in benefits as
these prices have gone up?
Ms. Meister. No, less benefits.
Mr. Stupak. Mr. Arnold.
Mr. Arnold. Yes, also less for me. Last year, in fact, when
my rates were raised 26 percent, Anthem also increased my
prescription drug co-pay for both brand name and generic.
Mr. Stupak. Ms. Henriksen.
Ms. Henriksen. No, I haven't, and sometimes when I open my
statement from them after going to doctor, I am shocked that
like, oh, wow, they didn't cover that. You know, it is things
like that, but I haven't calculated exactly any changes.
Mr. Stupak. You mentioned your son that had the heart issue
there, the hole in the heart. How long will they continue to
hold like a pre-existing condition like you mentioned he is
going to turn 22----
Ms. Henriksen. Probably the rest of his life.
Mr. Stupak. OK.
Ms. Henriksen. He will always have a heart condition.
Mr. Stupak. Which requires him to see a cardiologist. He
doesn't have any problems. He's playing sports.
Ms. Henriksen. He is completely fine. I mean, you know, you
can only cinch it so far, and it can't be completely corrected
so he will always have a condition in his heart, but he can
only stay on my insurance till I claim him as a dependent.
Mr. Stupak. Well, the other thing in looking at this file
and WellPoint and Anthem here in California, and we are looking
at one of the e-mails that the vice president for individual
pricing states, it says Jim has asked Brian to price five or
six downgrade options to be made available in conjunction with
the upcoming rate action, meaning this increase they are
passing on. In another e-mail the company's regional vice
president and actuarial, Brian Curley, proposes that WellPoint
create five or six California look-alike plans, look-alike
plans for California, with a benefit or two removed to create a
downgrade option upon renewal. My question, and I guess I will
direct it to Ms. Meister, how does it make you feel to know
that part of Anthem's business plan is to reduce or restrict
your health care coverage being offered to you on downgrade
options to switch it during your annual renewal. How are you
going to be able to afford your medication?
Ms. Meister. This is what has been happening the last few
years. I have had to downgrade because the price has gotten too
high so I will have to pay for my medications through my
savings through----
Mr. Stupak. What do you think that cost is going to be for
your brand name drug if you are going to go to the generic, so
what will that out-of-pocket cost be, do you know, of this
drug?
Ms. Meister. Yes. Accolate is $100 and I have to buy that
every month, so that----
Mr. Stupak. $100 for a 30-day supply. OK.
Ms. Meister. That is just for the Accolate, yes.
Mr. Stupak. Ms. Henriksen, Anthem, I believe you said,
offered to switch you to a similar plan to the one you have now
which would come with higher deductibles. What is your opinion
on the scale backs?
Ms. Henriksen. Pardon me?
Mr. Stupak. What is your opinion on, well, OK, I can get a
different plan. I am going to get less coverage but I am going
to have to pay more.
Ms. Henriksen. I figure I don't have a choice. I can't
afford the premium that they are stating for the existing
policy they have now so I have a call in to my agent and, you
know, he is going to go over options for me, but I know from
talking to him almost a year ago that because of my son's heart
condition I can only downgrade so far until he has to be
underwritten, and I don't want to do that. So, you know, I
would probably go with the downgrade of the $2,500 deductible
and 5,000 out-of-pocket because it is $47 more than my existing
payment but it is not $310 more.
Mr. Stupak. What is the breaking point when you can no
longer afford it at all?
Ms. Henriksen. Oh, I think it is insane as it is now.
Mr. Stupak. You said it was almost as high as your
mortgage, right?
Ms. Henriksen. Yes. It is $92 less than my mortgage
payment.
Mr. Stupak. Mr. Arnold, let me just finish up with you, if
I may. I know you have had a 74 percent increase in your
premium rates according to your testimony. Obviously, your
insurance hasn't gotten better. Do you believe Anthem is trying
to push customers off the plans with less comprehensive
coverage and in the plans that barely meets their needs so they
just drop coverage all together?
Mr. Arnold. Yes. I mean I think the reason that the plans
are going up are because healthy people are dropping it all
together because they are like me. They are getting priced out
of it. I mean I am generally a healthy person. I have an
existing condition, but it is getting so high that I mean if it
went up to $800 a month I would have to drop it. That I
couldn't afford. No way. But that is an extreme. Just to prove
a point. I mean 319 a month which they want to raise it to is
very, very difficult for me. The 231 that I have had for the
last year, I have not been happy with but, you know, I have
managed to do it even though last year was a pretty tough year
in this economy and my income was lower last year than it was
the year before. So, yes, they are trying to push people like
me out.
Mr. Stupak. Thank you. My time has expired. Thank you all
for being here. Mr. Gingrey, questions, please.
Mr. Gingrey. Mr. Chairman, thank you. And I will be fairly
brief. I wanted to direct my first question to Ms. Meister. Ms.
Meister, you mentioned in your testimony kind of in your
closing that you want just what members of Congress, members of
the House and the Senate have, nothing more, nothing less, and
I want to just say to you and to the other witnesses that I
agree with you. I agree with you. I think that the American
people in every state should have that opportunity and when the
health care reform bill was first marked up in this committee,
H.R. 3200, we spent hours and several days, in fact, several
weeks marking up that bill and amending it and making some
suggestions for amendments on both sides of the aisle. In fact,
two amendments that I had in particular that I think you will
like, and I would like to ask your opinion on it, was that all
Americans have what we have, members of Congress, and that
amendment unfortunately went down pretty much straight party
line, and I followed up with that and said, well, you know, if
there is a public option, and I think you in your testimony
talk about a public option, as you know, right now there is no
public option in any of the bills, but in this committee there
was. H.R. 3200, there was a robust public option, as I am sure
you know.
And so my amendment was, OK, if the public option is so
good, maybe it is, then let's show good faith in it and have
every member of Congress, House, Senate, and indeed the
President and the Administration and their families sign up for
the public option, and that also failed on straight party line
vote. I would like to know your opinion and maybe the other
members of the panel, what they think of that, those two
recommendations.
Ms. Meister. I am very willing to pay for insurance. I just
want to pay for something that is affordable and that actually
covers me. We have Medicare. I thought the plan that extended
Medicare to 55, down to 55, was a good idea, and have those
people between 55 and 64 pay for the plan, so I don't know what
else to say. I don't want to have to be spending the next 15
years of my life looking forward to being 65 so I can get
Medicare.
Mr. Gingrey. Well, yes, and certainly I understand your
point there but do you realize that, and I am sure you do, that
Medicare currently has an unfunded liability over the next 50
years of $35 trillion, and so to add that many more millions of
people between age 55 and 64 when we can't even meet the
obligations that we currently have, you know, that was the
problem with that proposal.
Ms. Meister. I see the country supported bail out for the
banks and for the car companies. I would like to see them bail
out the American people.
Mr. Gingrey. And I think you will be pleased to know that I
voted against that bail out for the car companies, and I thank
you for bringing that up. Mr. Arnold, let me shift to you just
a minute in regard to meaningful health reform. You mentioned
that. By meaningful health reform, would you include in that
medical liability reform?
Mr. Arnold. Absolutely, I would. I think that ideas on both
sides of the aisle, there are good ideas on both sides. Just to
address what you just said a moment ago about the public option
and so forth the reason that--well, you explicated the reason.
You said it was party line vote. It is politics. The party that
is not currently in power doesn't want to give the party that
currently is in power and the President a victory of any sort,
so parties and politicians and parties----
Mr. Gingrey. Well, Mr. Arnold, reclaiming my time because I
just got a very few seconds left. Absolutely, I think that we
ought to give the President the opportunity to do it in a
bipartisan way and that is why when we have this meeting
tomorrow at the Blair House, the health care summit, I feel
sure that the members on the Republican side from the House and
the Senate, maybe Dr. Coburn or Dr. Brasso representing health
care in particular as a profession will offer that, and I look
forward to the President hopefully adopting it because
California, as the three of you well know, enacted that
legislation back in the late '70s. I think the acronym was
MICRA, and it has worked. It has worked. And fortunately the
California legislature hasn't ruled any of that
unconstitutional so I am glad that you support medical
liability reform. Mr. Chairman, I see my time has expired, and
I will yield back.
Mr. Stupak. Mr. Arnold, did you want to finish an answer
there?
Mr. Arnold. Yes. I would like a brief moment to finish what
I was saying. I thank Mr. Gingrey for what he said, and I take
him at his word and I would hope that you would encourage all
of your parties and colleagues to operate in good faith and not
to use words, irresponsible words, like socialism and death
panels and so on and so forth that you hear from parties and
politicians and from partisan media commentators because they
are completely not an accurate description of the issues that
are at stake. Thank you.
Mr. Stupak. Ms. DeGette for questions.
Ms. DeGette. Thank you. Thank you, Mr. Arnold, for
clarifying your statement. I think what you said is important
and I hope everybody listens to it. It seems to me in listening
to all three of your testimony aside from the fact that you are
buying insurance on the individual market the other problem
that each of you has is either yourselves or family member with
a pre-existing condition that pretty much limits you from
trying to shop around and buy cheaper insurance, is that
correct, Mr. Arnold?
Mr. Arnold. Yes.
Ms. DeGette. Ms. Henriksen, Ms. Meister. And I understand,
Ms. Henriksen, when you were talking, I told my staff, I said I
feel like this is me because I am like you, I have two
daughters, 20 and 26, and like you my younger daughter has a
pre-existing condition which she will have for her whole life.
Not only does that limit--even though I am in the federal
employees insurance system, I am still limited in shopping
around because of underwriting, but what I am the most
terrified about with her is when she graduates from college and
starts trying to buy insurance on her own she is going to have
an impossible time buying a policy, especially as a young
person who is just starting out in the labor market that will
cover her pre-existing condition. I am sure that you have
thought about that too with your son.
Ms. Henriksen. That scares me immensely and with businesses
eliminating all insurance group plans and things like that in
my industry hardly anybody has it. I don't see how he is going
to be able to pay for an individual policy with a pre-existing
condition when he is working.
Ms. DeGette. Right. So here is my question for all three of
you. If you could go on some kind of insurance exchange that
allowed anybody to go in and buy from different insurance
companies, and the people on that exchange so you could choose
between competition between different insurance companies and
they couldn't exclude you or your kids because of a pre-
existing condition, do you think that would help you with your
insurance choices? Mr. Arnold.
Mr. Arnold. It sounds like it might, yes.
Ms. DeGette. Ms. Henriksen.
Ms. Henriksen. Yes. I believe that it is free enterprise, I
guess, and you are allowed the privilege of shopping for almost
anything else. Why shouldn't it be insurance too?
Ms. DeGette. Ms. Meister.
Ms. Meister. Yes, because we are being penalized for being
individuals and having individual plans.
Ms. DeGette. Right. And, you know, Ms. Meister, I want to
ask you about something because you said you thought it was as
good idea if they extended Medicare down to age 55 and with
every passing year that idea sounds better to me too. But were
you aware that those proposals didn't just say we are going to
pay for people to have Medicare. They would actually have to
buy in.
Ms. Meister. Oh, yes, absolutely.
Ms. DeGette. And you would be willing to buy into that
Medicare is what you are saying.
Ms. Meister. Absolutely.
Ms. DeGette. I just wanted to clarify that. OK. Now I just
want to explain one more thing with the 3 of you because I
think there has been some miscommunication about insurance
companies selling insurance across state lines. Were you aware
that right now insurance companies can sell insurance across
state lines, but if they do that they have to comply with the
laws of the state where they are selling that? Mr. Arnold, were
you aware of that?
Mr. Arnold. No, actually I wasn't.
Ms. DeGette. OK. Ms. Henriksen.
Ms. Henriksen. No, I wasn't either.
Ms. DeGette. Ms. Meister.
Ms. Meister. No.
Ms. DeGette. OK. Well, see, what happens right now
different states like California or Colorado or Iowa or
Georgia, any of the states, they can sell insurance across
state lines, but if they do that they have to give people the
insurance coverage that those states require, so if California
says you have to cover maternity benefits or you have to cover
prostate cancer screening or something else, then they have to
do that, but what the proposal that some from the other side of
the aisle have made is to say people could sell insurance
across state lines but they would only have to comply with the
laws of the state where they are incorporated. It would be sort
of like how all corporations, not all, but a lot of
corporations incorporate in Delaware because those state laws
are very favorable to corporations.
So they can incorporate in a state which had very low
requirements for coverage. And I want to talk to you about
that, Ms. Henriksen, because you got 2 kids. Would it help you
to be able to buy a very low cost plan but one that didn't
offer very many coverages for you like mammography or some
screenings for your kid? Would that help you?
Ms. Henriksen. I guess I would have to see specifically
what they were offering.
Ms. DeGette. What it was, yes.
Ms. Henriksen. But, like I said, we are so lucky, all three
of us, to be healthy. We never go to the doctor. We have very
little cost incurred, you know, through insurance so I would be
interesting to see what I could eliminate and what I would then
need. I could pick and choose, I guess.
Ms. DeGette. Yes, you could pick and choose. But you
wouldn't want to buy a plan that would barely cover anything if
you got sick.
Mr. Henriksen. No.
Ms. DeGette. And, Ms. Meister, would you want to buy a plan
that wouldn't cover the specific medications that you needed?
Ms. Meister. I would have to work it out and actually
figure out the financial side of it and see how much my
medications cost me per year and how much I am being covered. I
mean even now I have a deductible for the brand. I believe it
is $500. Until that kicks in, it is 4 months into the year.
Ms. DeGette. OK. Thank you.
Mr. Stupak. Thank you. Mr. Braley for questions. We will
wait for Mr. Green to get settled there.
Mr. Braley. Thank you, Mr. Chairman. I began my opening
remarks by talking about the fact that I am not a Democrat who
limits my conversation to health insurance reform because I
believe that health insurance reform is a key part of
comprehensive health care reform. And I am so glad the three of
you are here today because you helped put a human face on what
is wrong with health care and health insurance delivery in this
country right now. We had 17 town hall meetings back in my
district last summer and what I learned is that people who
oppose health care reform, and especially the health care
reform we have been talking about, really don't want to talk
about the human face of health care, so I want to spend a few
moments talking to you about that.
One of the people who came up to me in my last town hall
meeting ripped the House health care bill, and then said after
the meeting, Congressman, I need your help. I said what can I
do? He said my brother was just diagnosed with non-Hodgkin's
Lymphoma, and he lives in the northern part of your district.
The closest place for him to get treatment is at the Mayo
Clinic in Rochester, Minnesota, but he can't get treatment
there because they are not in his insurance plan's provider
network. Another young woman interviewed me during the health
care debate who was a class mate of my 2 sons, sat down to
interview me, and the first thing I noticed about her was she
had a cleft palate. And during her interview, she told me that
she was so excited because her parents had almost saved up
enough money for her last surgery, and I said isn't that
covered by your insurance policy? And she said, no, it is
defined as cosmetic surgery under my plan.
So a woman, 21 years old, born with a birth defect just
like cystic fibrosis or cerebral palsy, which are covered under
health care policies, has gone 21 years with a birth defect
that limits her ability to eat, to talk and, most importantly,
her self esteem. The last one I want to talk about is my
nephew's son, Tucker Wright, who I have talked about before in
these hearings. Tucker was 18 months old when he was diagnosed
with liver cancer, had 2/3 of his liver removed, has had
enormous medical costs, and thank God he is still alive, but he
will almost certainly reach his lifetime cap under his private
health policy by the time he is 18. He will almost certainly
have another bout of cancer before he turns 18. His parents are
doing fundraisers to cover their uninsured medical costs. Both
of them work full time and have good health insurance, and yet
if his parents want to change jobs they would not be able to
because of the exclusion for pre-existing conditions.
All three of you have lived this in your own lives so I
want to ask you, Ms. Meister, you have chronic asthmas, you
talked about that. If you opted to terminate your policy with
Anthem and purchase an individual insurance policy to get a
more reasonable deductible or premium, you would have to go
additional medical underwriting, correct?
Ms. Meister. I would imagine so, yes.
Mr. Braley. Right, because that is the way this works. And
given your chronic asthma, do you think that that would be a
problem for you in getting additional coverage?
Ms. Meister. Personally, I work out every day. I live a
very healthy life so I don't--but on paper that is a different
story.
Mr. Braley. You have to fill out the same questionnaire.
Ms. Meister. They should talk to me like you are talking to
me.
Mr. Braley. Yes. And, Ms. Henriksen, you talked about your
son's problem with the condition with the hole in his heart.
When you fill out any application for underwriting purposes,
you are required to go through your family's health history and
that would appear.
Ms. Henriksen. Yes.
Mr. Braley. And does that concern you?
Ms. Henriksen. Oh, completely.
Mr. Braley. And, Mr. Arnold, you were the one who concluded
your compelling remarks with a smack down to all of us about
doing what is right, and you also have been affected by this
because these are the types of things that make it frustrating
for people to get private insurance because this can be so
daunting. Is the experience that you have had consistent with
what the other witnesses and some of the people we have been
talking about face every day and try to get health care
coverage?
Mr. Arnold. Absolutely so, yes. Yes. I won't repeat
everything that they just said, but what Ms. Meister said about
being underwritten again and pre-existing condition either not
being covered or causing the base rate on that policy to be
marked up by my insurance agent told me 20 to 100 percent
because of that condition. These are the kinds of things that
can happen.
Mr. Braley. Mr. Chairman, health insurance is supposed to
help us when we are sick, not punish us for requiring medical
care, and I think what we have heard today reinforces the need
to get health reform done now. We as a country cannot afford to
wait any longer. Passing meaningful health care legislation
that eliminates disqualification based on pre-existing
conditions is absolutely essential so that every American can
have access to quality comprehensive health insurance, and I
yield back.
Mr. Stupak. Thank you, Mr. Braley. I should note that
Representative Hill is with us. He is a member of our
committee. We had a hearing on rescissions down in his district
earlier this year in Indiana. Like I said, we would be happy to
go where we need to go to do these hearings because I think it
is important that we put a human face on the cost of health
insurance. We have votes coming up. I am going to try to get
through this panel if we can. Mr. Green, you are up for
questions, please.
Mr. Green. I appreciate my colleague from Iowa questions
and your responses. I want to look at it from a different tact
because you have trouble with rate regulation or insurance
regulation in California. In Texas we have never had any
regulation. It is literally the free market. And having been
involved as a state legislator in trying to deal with fairness
for my constituents and purchasing individual policies and
having a son who had the same problem is his small business
trying to find an individual policy. He couldn't find one
because in high school he was diagnosed with colitis and nobody
wanted to write him except for $2,000 a month. He has found it
through an HMO or PPO in Real Ranch Valley in Texas so he can
get it at least for his 2 boys now and his wife because he just
couldn't do it. So problems in individual market and oversight
whether it is in California or Texas or Virginia or anywhere
and that is the issue. And that is why the lack of oversight or
ability to look at what these premium increases that we are
getting ready to experience.
My concern, and this is something that members of Congress
have to defend when we travel anywhere, and believe me it has
made us watch where we are traveling. I want to ask some
questions. In addition to paying their top executives
handsomely between 2007 and 2008, WellPoint spent over $27
million to host 103 executive retreats off company premises.
The Democrat caucus actually had our retreat here at the
Capitol. Fifty-five of these retreats, over half the costs were
over $100,000. To put that in perspective, the median income in
the United States in 2008 was $52,000, and so you can see that
over half the retreats were over 100,000 so that was well over
the median income. In 2007, WellPoint spent 3.7 million to host
782 attendees at a brokers and agents event at the Phonecian, a
lavish resort and spa in Arizona, for 5 days. And if I could
put up a picture of that slide.
Later that year, WellPoint sent 154 attendees to the Four
Seasons resort in Manlei Bay, Hawaii for a 4-day broker event
that cost the company 850,000. That is over 500,000 a person.
If we could put that slide there. In 2008 during the height of
the recession, WellPoint paid over 1.3 million to host 360
attendees at the Four Seasons Hotel in San Diego, and if we
could put that slide up there. Ms. Henriksen, do you think a
company that is struggling to keep up with the rising health
care costs would be able to send thousands of employees and
agents on lavish retreats such as these?
Ms. Henriksen. No, definitely not. I would like to know
what they are doing at these retreats.
Mr. Green. Mr. Arnold.
Mr. Arnold. Of course not.
Mr. Green. Ms. Meister.
Ms. Meister. No.
Mr. Green. What is your reaction to the images and figures
because I know what my constituents would be if I was at that
locations, and since you are ultimately paying the freight or
asked to pay the freight, does it make you wonder if your hard-
earned premiums have indirectly gone to paying for the spa
retreats and the golf getaways?
Ms. Meister. I was thinking I wish I was an executive at
WellPoint.
Mr. Green. Mr. Chairman, it seems unconscionable that the
company with the spending record that would reach deeper into
the pockets of the policy holders at a time when so many
Americans are struggling to stay afloat, it also seems to me
that any company that can afford to send hundreds of their
employees to these lavish retreats all over the world can
afford to maintain reasonable and affordable premium rates for
its customers, and that is what bothers me. On the individual
market, we don't see that regulation and oversight on the state
level, and that is why maybe on the national level, I know
President Obama earlier this week announced that, there are
parts of his bill that I have problems with or his suggestion,
but one of the things I like is if we are going to sell
insurance across state lines to individuals whether they be in
Houston, Texas where I represent or San Diego or anywhere else,
I would like to see that there is some oversight on what they
are doing with that money to justify those premium increases.
Thank you, Mr. Chairman.
Mr. Stupak. Thank you, Mr. Green. Continuing with
questions, Ms. Sutton, questions, please, for this panel.
Ms. Sutton. Thank you, Mr. Chairman, and thank you for your
compelling testimony. I think your stories speak to the stories
of many Americans across the country, including my
constituents. To follow up on my colleague, Mr. Green's
questioning, I would just like to talk a little bit about the
executive at WellPoint. Not only do we see the lavish retreats
that were pictures that were reflected on the screen, we also
know that as premium rates increase and become more and more
inflated and health insurance coverage slips further out of
reach for people just like you, it is important to ask where
are the revenues going, not only to retreats but also to
executive salaries.
WellPoint has stated publicly that these most recent
premium increases were necessitated by rising medical costs and
a shrinking risk pool, that it needs these rate increases in
order to stay afloat. But I understand that companies do need
to turn a profit. We all understand that. But what I don't
understand is how WellPoint can claim that these increases,
rate hikes that are literally bankrupting its policy holders
are necessary to stay in business especially when we see what
we see when it is spending millions upon millions of dollars
compensating its top executives. Data received by the committee
show that WellPoint paid its executives over $347 million in
2007 and 2008 alone.
In 2008, WellPoint paid $115 million to 85 senior
executives compensating 39 executives over a million dollars
each. That year one executive made $9 million and two
executives made over $4 million. And I guess I would just like
to ask you, our witnesses and policy holders, how you feel
about a portion of your premium payments bankrolling multi-
million dollar salaries in these tough times. Ms. Meister, do
you believe a company that can afford to pay a single executive
nearly $10 million in 1 year has the right to demand higher
premiums from you so that it can ``keep up with the market?''
Ms. Meister. No, I don't. And I agree with something Ms.
Henriksen said. She said if I raised my rates like they raise
our rates, I wouldn't have clients, and that is the same in my
business. You know, there is reasonable and then there is just
outrageous.
Ms. Sutton. Thank you. Ms. Henriksen.
Ms. Henriksen. Well, not to be funny but it makes me sick
to think that all of this money is going to executives in this
economy when so many people are struggling. I do make good
money, yet my industry is really struggling. There are no new
hotels being built. There are no, you know, residential. There
is no building going on so I suffer because of that.
Ms. Sutton. And Mr. Arnold.
Mr. Arnold. I, of course, too think it is unconscionable,
and I believe the number I read was that in the last quarter
WellPoint had a profit of over 4 billion. Even if you cut that
in half, it is still an incredibly healthy profit, so it just
speaks to, as I said in my testimony, profiteering versus
profit making. There is a difference. And profit making is
fine. It drives our economy. It is the foundation of American
business. But profiteering, when it affects people like us in
the way that it has, is just wrong. It speaks to a lack of
decency, and lack of decency may not be illegal but it is wrong
and that is why I think it requires government intervention and
regulation.
Ms. Sutton. Thank you. I think you all make the case very
well, and for one don't think a company that is paying its
executives more than $100 million a year has any right asking
Americans to subsidize these outrageous salaries in the form of
increased premiums and stripped down coverage. It is not like
you are getting more for what you are paying.
Mr. Stupak. The gentlelady has yielded back. We have three
votes on the floor, and the first vote is the rule to allow
debate to begin on the antitrust exemption if we are going to
take it away from the insurance industry so it is a rather
critical vote and thus far it is down basically party lines. So
I am going to recess for--hopefully we are back here in 20, 25
minutes. And I would like this panel to stay if they can. I
would love you to stay because you have Ms. Schakowsky and I
know Mr. Hills, Ms. Capps, and Ms. Eshoo all probably had
questions too. It has been a good panel. We would like you to
stay. So let us try to be back in here in about--let us call it
25 minutes. This vote might stay open for a little bit. Twenty-
five minutes, so we are in recess till 12:25.
[Recess.]
Mr. Stupak. Thanks for coming back right away, all the
members. Let us resume this hearing. When I left, I think Ms.
Schakowsky, you are up for questions if I remember correctly.
And thanks to the panel again for staying.
Ms. Schakowsky. Thank you, Mr. Chairman, and thank you
panel. You know, it occurred to me that this panel would only
take place of the industrialized nations in the United States
of America, that in every other industrialized country, they
have made the threshold decision that healthcare would be
provided in some fashion, maybe through the public sector,
often entirely through the private sector, but still to all of
their people.
The other thing that occurred to me when we look at all
three of you, and I guess I would have to add your son, we are
talking about essentially healthy, high-functioning
individuals, not a bunch of sick people, which underscores
that, you know, it is hard to reach hardly any age at all
without having some sort of a preexisting condition.
I had, and I don't know where they just disappeared to
here, this is from Blue Shield of California. It is a little
old, 2006, a three-page, four column list. It says ``Applicants
who have any of these conditions listed below may be declined
without medical record review.'' Things like adoption in
progress, how about that? Breast microcalcifications. I mean,
lots of women have that. Diabetes with hypertension. We were
talking about Diana's daughter who has--pregnancy of self,
spouse or significant other. Varicose veins would be a
preexisting condition that would deprive people of, you know,
no, you can't have this insurance.
I wanted to see if we could put up on the screen, the
Committee recently learned that these recent premium increases
may only be the tip of the iceberg. Staff, if anyone here to
put up the internal----
Mr. Stupak. There you go.
Ms. Schakowsky. There we go.
[Slide shown.]
Ms. Schakowsky. WellPoint analysis of what potential rate
increases would do for them. These are various scenarios. The
first scenario calculates, they call them, SAFs. Those are
really rate caps. If they left it unchanged, that is, the rates
unchanged, the second scenario actually proposes to lower the
rate caps to 37 percent which is two percentage points lower
than the rates that Anthem filed with the Department of
Insurance. And the third proposes, and I quote, ``to remove
these rate caps completely.'' The scenario would result, they
say, in a maximum of 228.4 percent for certain plans. And had
this scenario been implemented, over 27,000 customers would
have received a 228 percent increase.
The fact that they would even consider and do the scenario
to me is just incredibly shocking, but I guess my conclusion is
that we cannot just leave the insurance companies in the
driver's seat deciding how they will regulate themselves
according to rates. What our bill did and what the President's
bill does is establish rate review that could actually prohibit
some of these rate increases, and I wanted to hear your
feelings about that. Let us start with Ms. Meister and just go
across.
Ms. Meister. Yes, I mean, that is what I said before. We
need to have a maximum percentage put on of how much insurance
companies can raise their rates each year, just like some
cities have rent stabilization.
Ms. Schakowsky. Right.
Ms. Meister. There could be stabilization of insurance
rates.
Ms. Schakowsky. Let me also say some states do that. I am a
state that does not, one of the 25 states that doesn't do any
rate regulation whatsoever right now. Ms. Henrikson?
Ms. Henrikson. I am all for a national committee that would
review rates. I feel California has been neglectful in that
sense. So I know it is based on where you live and all that
kind of thing, but I believe a national rate regulation would
be very beneficial.
Ms. Schakowsky. It would be called a National Health
Insurance Rate Commission I think is what we are talking about.
Mr. Arnold. Yes, I agree with that, too, and I would also
add that I think if there were rate regulation on insurance
companies that that would also put pressure on medical
providers, hospitals and doctors, who we keep hearing are
raising their rates so irresponsibly. If that is true, that
would force them to change their ways as well.
And just very quickly, what you said about unregulated
insurance premiums keep rising, it is true. I mean, my rates
went up 26 percent last year, 38 percent now. Why should I have
any reason to believe they won't try and raise them another 40
percent next year? I mean it is logical to think that they
would.
Mr. Stupak. Thank you. A member of the Full Committee, Ms.
Eshoo, do you have questions, please, of this panel? And thanks
for being here. You are not a member----
Ms. Eshoo. Thank you, Mr. Chairman.
Mr. Stupak [continuing]. Of the Subcommittee but a member
of the Full Committee.
Ms. Eshoo. Thank you, Mr. Chairman, for having this
hearing. I appreciate the opportunity to participate, and I am
very glad that we have the rules that allow members from other
subcommittees to join you. This is a very important hearing.
I want to thank the witnesses. So many members have said
you really put the human face on this. And while my questions
are not directly for you but rather the executive, I just
thought that I would enter for the record, I did write to Ms.
Braly, the President and CEO of WellPoint, after the news came
out about the rate hikes up to 39 percent. But I think that it
is a telling thing that Anthem Blue Cross, the unit, in an
email message urged their employees to oppose healthcare
reform. And that email is reported to have said that reform
proposals would ``cause tens of millions of Americans to lose
their private coverage.'' And it seems to me that this panel is
right on the edge, given what the increases were. So I think
that more than anything else, you have helped to separate, you
know, the political rhetoric that has gone across the country,
and really what the facts are because this is your life. You
are speaking of real-life experiences. I can't think of a
better panel to have come in and testified. This case is not
over. I think that there are, I know that there are, many of us
that to our last breath will fight for the kinds of reforms
that need to take place, both in the health insurance industry
and healthcare as well because this simply cannot be sustained,
not individuals, not families, not local governments, not state
governments, not the Federal Government and not businesses,
either. So thank you for traveling across the country to
testify. I admire your spirit, and I like the way you just keep
following up with members and saying it the way it is. That is
not often the case with witnesses, so we thank you.
Thank you, Mr. Chairman. I am going to have to leave for my
Intel Committee meeting, but I thank you again for your
legislative hospitality.
Mr. Stupak. Thank you. Well, that concludes questions of
members of the panel and of the Committee. So I want to thank
this panel for coming. Let me just say one thing. Mr. Arnold,
in a question that was put to you, a clarification. I don't
want to get into the healthcare debate because I think it is
more important that we hear from you. We have had enough
healthcare debates. We need to act and move legislation along.
But there was some questions about your premium, what you would
pay and what you would pay underneath the House bill as it was
passed. I think Mr. Burgess asked you some questions along
that. Those numbers he was quoting you is from Congressional
Budget Office, and that would take place in 2016. They wouldn't
be what your current premium would be, plus underneath the
House bill you would have a full plethora of services. You
wouldn't be denied because of preexisting injury or illness.
You have preventative care. There is a number of benefits there
in the House bill that is probably not covered in your current
one. So just to clarify the record, that number is thrown out
to be more than your current policy would be in 2016, and we
don't know what your policy would be in 2016 from Anthem we are
going. So just a clarification.
Again, let me thank this panel.
Mr. Burgess. Mr. Chairman, with all due respect.
Mr. Stupak. All due respect, I will let you go for a minute
but I am not going to let you pontificate for 10 minutes.
Mr. Burgess. No pontifications. That was based on the 2009
figures if the bill had passed last year. The Chairman is
correct because none of the benefits go into effect for 4 years
from the passage of the bill. Taxes of course would go into
effect on day one.
And also, just a point of clarification, Mr. Arnold. You
made the comment just a moment ago that providers were raising
rates irresponsibly. Do you have an example for us of a
provider that you have encountered that has raise rates
irresponsibly?
Mr. Arnold. I don't, but I think your next witness, Ms.
Braly, will say over and over again how they are raising their
rates.
Mr. Burgess. And I am ready for that. I just needed to know
if you had some information that I needed to be aware of.
Mr. Arnold. No, I don't personally have specific examples
of that.
Mr. Burgess. Most doctors in my state, and I suspect
California is the same way, our prices are set by the insurance
companies which in turn are set by Congress with Medicare
rates, and private insurance pays a percentage of what
Medicare's maximum allowable fee schedule is, even for those
procedures that are not covered under Medicare, like
childbirth. So I just wondered if you had some direct
experience because I do intend to question Ms. Braly about that
extensively.
Mr. Waxman. Will someone yield to me?
Mr. Stupak. Yes.
Mr. Burgess. I would be happy to yield to----
Mr. Waxman. Medicare sets rates for the whole country, and
it turns out that Medicare could be less than what private
insurance pays in any particular area. But the private
insurance companies negotiate the rates presumably with the
doctors and other healthcare providers. They and Medicare are
faced with ever-increasing costs in healthcare. That is a fact.
It doesn't mean that anybody is doing anything wrong, but the
system is costing more and more money, and one of the things we
try to do in health reform is not only reform the insurance
system so we don't have people who have to fight on an
individual basis to get any opportunity to buy insurance at a
fair amount, but we try to hold down healthcare costs overall,
and that is important. So I just wanted to raise that point.
Thank you.
And I join with the Chairman in thanking these witnesses
for being here. You have been terrific. Thank you so much.
Mr. Stupak. Thank you again. We will dismiss this panel and
thanks for your testimony. I would now like to call up our
second panel of witnesses.
On our second panel we have Angela Braly, President and
CEO, WellPoint. Cynthia Miller, Executive Vice President, Chief
Actuarial and Integration Management Officer of WellPoint.
Welcome. It is the policy of this Committee--signs down,
please.
Ms. Braly. Pardon me?
Mr. Stupak. Before we get going, we are not going to allow
signs and that while we are trying to conduct this hearing, OK?
No, just put them away. Very good. Thank you.
It is the policy of this Subcommittee to take all testimony
under oath. Please be advised that you have the right under the
rules of the House to be advised by counsel during your
testimony. Do you wish to be represented or advised by counsel?
Ms. Miller. No.
Ms. Braly. No.
Mr. Stupak. OK. I am going to ask you to please rise, raise
your right hand to take the oath.
[Witnesses sworn.]
Mr. Stupak. Let the record reflect that the witnesses
replied in the affirmative. You are now under oath. We will
have an opening statement. It will be 5 minutes long. If you
would like to submit a longer statement for inclusion in the
record, we will be happy to submit it.
Ms. Braly, if you don't mind, we will start with you.
Ms. Braly. Yes.
Mr. Stupak. OK. Just pull that up. There we go. Great.
TESTIMONY OF ANGELA BRALY, PRESIDENT AND CEO, WELLPOINT,
INCORPORATED; AND CYNTHIA MILLER, EXECUTIVE VICE PRESIDENT,
CHIEF ACTUARY AND INTEGRATION MANAGEMENT OFFICER, WELLPOINT,
INCORPORATED
TESTIMONY OF ANGELA BRALY
Ms. Braly. Thank you, Mr. Chairman, and members of the
Subcommittee for this opportunity to discuss rising healthcare
costs and the need for sustainable healthcare reform. This is a
very important week for all Americans, and I am sure you join
me in hoping that tomorrow's health summit will be the
beginning of a truly constructive, positive process in which
every American can have confidence.
I am especially pleased to have been invited to speak with
you because I understand the burden that rising healthcare
costs put on families. Because of our role in healthcare, it is
often insurers who have to deliver the bad news regarding
spiraling healthcare costs. There is nothing I would like to do
better than be able to report to our members that the medical
cost trend is going down. That is why I appreciate the
opportunity to explain why healthcare costs are rising not only
in California but across the country. The increases we are
seeing in California are due to factors that we have been
sounding the alarm about for years, the rise in healthcare
costs and healthy people opting out of the system when other
issues arise, such as the tough economic times we are
experiencing today.
These factors led to the rate increases you have seen from
our company and others in California. Rising healthcare costs
are driven by many factors including hospitals and other
healthcare providers charging higher rates, new medical
technology, underpayment by government programs, the growth in
chronic diseases and conditions like obesity, and an aging
population. These increases are generally compounded when
younger, healthier members drop their insurance leaving those
who most need healthcare to foot the bill. These issues are
particularly acute in California where our experience has been
that medical inflation is in the double-digits. Also in
California, we are required to offer coverage through two
guaranteed issue programs which by themselves lost almost $70
million in 2009. Those are important programs that serve an
important purpose, but their costs are ultimately borne by
other members in California.
Unless a legislative proposal addresses the fundamental
issue of rising healthcare costs, it cannot be considered
sustainable healthcare reform. Unfortunately, the leading
proposals being discussed in Washington don't do enough to
control costs and don't do enough to get everyone into the
system. We have put forward substantive proposals on both these
fronts. My testimony submitted to the Committee includes our
specific suggestions on reform, but let me highlight just
three.
First, Congress could address defensive medicine and
inappropriate care by including meaningful medical malpractice
reform in the legislation.
Second, Congress could also require that the principles of
evidence-based medicine be used to guide how payments are made.
While this may seem like a technical issue, it is these kinds
of reforms that can have a lasting impact on quality and cost.
Third, in reforming the health insurance market, Congress
must enact policies that ensure a broad and stable risk pool as
they impose other requirements on the marketplace.
We know that every facet of the healthcare system,
hospitals, clinicians, manufacturers, drug companies, payers,
and we as Americans, contribute to the growth and healthcare
costs and all need to be called upon to reduce these costs. Out
of every dollar the Nation spends on healthcare, less than one
penny goes to health plan profits. Isn't it time to ask, what
are we going to do about the other 9 cents? Unfortunately, the
deals made with the drug companies, hospitals, physician
groups, and labor unions left the legislative proposals
considered thus far without the most important part, the core
solution for lower cost, higher quality healthcare.
Rising healthcare costs frustrate all of us. It is a
serious problem facing the country that deserves not only a
serious discussion but meaningful action. WellPoint is eager to
continue to participate in both. While it may be tempting to
shift the blame to insurers for rising healthcare costs, to do
so would be the triumph of sound bites over substance. Insurers
are among the least profitable part of the healthcare system
and the part that helps the most in making a meaningful
reduction in healthcare costs. Insurance industry margins are
dwarfed by the margins of others in healthcare. Real reform
needs to focus on the areas where systematic savings could be
realized.
The elephant in the room is the growth of healthcare
spending. Despite the attention we have garnered in this
debate, we are the tail on the elephant, and we need to address
the elephant.
Thank you for the opportunity to be here today. This is a
critical time for our country and for the healthcare debate,
and I look forward to discussing with you ways in which we can
work together to control rising healthcare costs.
[The prepared statement of Ms. Braly follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Stupak. Thank you, Ms. Braly. Ms. Miller.
Ms. Miller. I have no prepared statement.
Mr. Stupak. Oh, you're not going to do a--OK. Well, let me
ask this question. Let me ask about WellPoint's motivations and
increasing premiums. I have sort of mentioned it and others
have mentioned it. WellPoint's executives, and in a way, Ms.
Braly, you asserted the profits were not a motivating factor in
raising the premiums in California. In written testimony you
indicated that you were disappointed that the critics cited
profits as a primary reason that companies were increasing the
cost of premiums.
So let me ask you this. Right there is a document book on
Tab 13. Please take a look at Tab 13 if we could put it up on
the screen.
[Slide shown.]
Mr. Stupak. It is an email that was sent on October 7. It
is in response to a voice mail--and in fact, I think you are
the one who left the message, senior corporate actuarial wrote
the average increase is 23 percent and is intended to return
California to a target profit of 7 percent versus 5 percent
this year.
So my question is, were you attempting to raise profits to
7 percent then in California by increasing the premiums? Was
that the purpose behind this email?
Ms. Braly. I think Cindy Miller was going to respond to
that because the email----
Mr. Stupak. It was to her, right.
Ms. Miller. Yes, it is important to understand that that
email was during the process of setting the rates, and it only
refers to part of our California individual business. I think
it makes reference to the fact that we had a 5 percent profit
and are in that block.
Mr. Stupak. In the previous year, right?
Ms. Miller. In 2009. That in fact did not turn out to be
the case. We lost money in the individual market in 2009 on our
California business, and the profit that we have targeted in
the rate increases that we have asked to implement for 2010 is
less than 2 percent.
Mr. Stupak. But the email basically says we have got to get
the 7 percent if--got to increase our premium 7 percent so we
can add that 7 percent profit. We have got to increase our
premiums, right?
Ms. Miller. The email was sent on October 7, the rates
weren't filed until November 7th, and experience on that
block----
Mr. Stupak. Well, let me ask you----
Ms. Miller [continuing]. And the medical claims continued
to escalate more than we anticipated----
Mr. Stupak. Sure. Let me ask you one about November 22 then
if it was filed on November 7. Go to Tab number 22. On it, it
is an email of November 2, and then you said you filed on
November 7 from Brian Curley, WellPoint's Regional Vice
President and Actuarial wrote, Note, we are asking for premiums
that would put us 40 million favorable. One week earlier, Mr.
Curley informed Brian Sassi, the President and CEO of
WellPoint's Consumer Business is that if we get the increases
on time, we will see an op gain upside of 30 million after
downgrades and rate cap.
I guess my concern is we say publicly we are not increasing
rates to increase our profits, but yet, these emails sort of
indicate that you have to have a minimum increase in order to
maintain profit. Go ahead.
Ms. Miller. Well, again, it is important to remember what I
just said which is the lost money in the individual market in
California in 2009, and that is not a sustainable business
market. So certainly we are talking about profit increases in
absolute dollars, but again, when you look at the profit margin
that is built into the rates for 2010, it is less than a 2
percent profit margin.
Mr. Stupak. Well, OK, but look, we have seen your internal
corporate documents that you used a variety of accounting
mechanisms to sort of manipulate the profit figures. Look, we
have seen at least five different accounting measures used to
describe profits. The methods include pre-tax income, post-tax
revenue, operating gains, underwriting margins and profits. If
I remember correctly, WellPoint, at the end of 2009 in the last
quarter, the last 90 days, their profit was $2.7 billion or
something like that, right?
Ms. Braly. Well, let me speak to that because the fourth
quarter of '09 was the quarter in which we sold our pharmacy
benefit management company. That is a company we had had and
invested in for years, and our belief was that by selling that
company and partnering with Express Scripts which is a pharmacy
benefit management company, we could do the important thing
that many of these panelists described which is getting lower-
cost drugs for our members by that combination. So if----
Mr. Stupak. Great.
Ms. Braly. And those earnings now are, you know, no longer
part of our company because we have sold that. And so when you
look at our total earnings for 2009 and look at our net margin
which is an appropriate measure to look against other elements,
we were at 4.8 percent. That was our margin----
Mr. Stupak. That was your margin? What does that equal in
real dollars in 2009?
Ms. Braly. That was about $2.385 billion.
Mr. Stupak. OK. 2.8 billion, that was your profit in 2009
which is a year that everyone would consider was a horrible
year economically in this country and hopefully 2010 will be
better. But what I am concerned about is our hardworking
Americans are asking to increase their premiums to the wealth
of WellPoint's investors. I mean, look it, yesterday you had
the hearing yesterday in California, right, on the rate
increase and Anthem President Margolin, is that how you say
that, defended the profit margin during the hearing and he is
saying it should be about--the 5 percent is a figure that he
said would be acceptable. In fact, he said we have no interest
in profit beyond the range I have described to you, 2.5 to 5
percent is reasonable in their appropriate profits. But when
your policyholders are taking a hit like the last panel see,
everyone of them were self-employed, they are individual, you
know. It is that group, basically self-employed people, they
have taken 30, 40, 50 percent hit, but it seems like every year
you have got to have a profit. Is it reasonable to expect every
year companies are going to have profits and we got to have at
least 2.5? It would be great if we could guarantee every
business to have 2.5 to 5 percent profit. What the heck, you
are at 7 percent or more.
Ms. Braly. You know, actually, over a 5-year period, our
profit margin has declined. We continue to get more efficient
as a company and as a business, and we are working hard to
reduce healthcare costs and improve access to high-quality,
affordable healthcare.
So it is important to be a business that sustains, that we
have an appropriate profit, and we think a 4.8 percent margin
on a relative basis is very efficient. And when you look at
that compared to others in the healthcare system, you know,
biotech companies are 23 percent profits, pharmaceutical
companies are in the 20 percent profit. We have a chart in our
written testimony describing that even community-based hospital
margins are in the 6.9 percent profit margin. So we are part of
the healthcare system that is striving to get to more
affordable healthcare for all our members.
Mr. Stupak. The only way we will get more affordable is to
knock off these profits that are being paid for by the average
American. I mean, I don't mind you making a profit, but at the
end of the year, 2009, a horrible year, you still made $2.-
something billion and that is not enough?
Ms. Braly. And we serve 34 million Americans across the
country, and we feel that it is appropriate for our business to
be sustained so that we can be there for those members when
they incur those healthcare costs. We want to be solvent as an
organization and be able to continue to invest in ways in which
we can get to a more affordable, higher-quality healthcare
equation.
Mr. Stupak. Sure, and I don't mean to inject the healthcare
debate in this whole deal, that is why so many of us believe in
a public option. You are killing the average consumer. They
can't afford anymore. We have got to put an option up there.
Today we are doing the antitrust exemption. Hopefully that
helps.
My time is way over. Mr. Burgess, please, for questions.
Mr. Burgess. Thank you. I appreciate you all being here
today. I appreciate having an actual actuary here at the table.
It is a shame that we don't have the state actuary, and you all
could compare notes because I presume you prepared some
actuarial findings and presented those to the State Board of
Insurance, is that correct?
Ms. Miller. Yes, my team does, by law, is required to do
rate filings in which we certify that the rates meet the law
and are reasonable. In addition, we have an independent,
outside actuarial firm, Milliman, probably the most respected
firm in the country, also verify that they thought our rates
were reasonable and appropriate and met the law.
Mr. Burgess. And those went to state regulators?
Ms. Miller. Yes.
Mr. Burgess. When was that?
Ms. Miller. Our filing was on November 7. The independent
actuary reviewed the filing in mid-November and issued a letter
on December 15 that they believed that rates were appropriate.
Mr. Burgess. Is it possible for you to provide this
Committee with a copy of that letter? Do we have that in our
evidence binder somewhere?
Ms. Miller. I believe so.
Mr. Burgess. We could get a copy of that letter or we
already have it?
Mr. Stupak. We may already have it. It is not in the
evidence binder.
Mr. Burgess. OK. And then what was the response of the
state regulators to the actuarial information they were
provided? That this was outrageous? How dare you?
Ms. Miller. By law, the state is supposed to respond within
30 days to the filing. We heard nothing from the state until
actually Christmas Eve, and on Christmas Eve we got several
questions from the actuary about one of the products, our Smart
Sense product, and the filing for that. We responded to those
questions, and then we heard nothing else from the Department
of Insurance until the news broke of the rate increases in the
LA Times.
Mr. Burgess. I see. You know, you had to know this was
going to be trouble. I mean, a 39 percent rate increase in this
climate? You know what we have been doing up here the last
year?
Ms. Braly. Yes.
Mr. Burgess. You know what is happening at the White House
tomorrow?
Ms. Braly. Yes.
Mr. Burgess. You knew this was going to be trouble.
Ms. Braly. Yes.
Mr. Burgess. You did the report on Christmas Eve. You know
what else happened on Christmas Eve? They passed a bill in the
Senate. So you knew the landscape into which you were entering,
correct?
Ms. Braly. Correct.
Mr. Burgess. Did you make a judgment as to whether or not
this was the best time to do this?
Ms. Braly. You know, it is always a challenging issue to
raise rates. And to address the issue that many have brought
up, you know, our desire is to have more members. Our goal is
to continue to serve members and have more members. It is not
easy. It is difficult to continue to have to raise rates. The
process was under way clearly. The rates had been filed. We had
had this certification also----
Mr. Burgess. I don't want to interrupt you, but I am going
to run out of time. You see how mean he is?
On Tab 18, where we talked about the rate increases, we
also talked in an email about a cushion to allow for
negotiation, margin expansion. Kind of sounds like what we do
with appropriators. We ask for twice what we need, hoping they
will give us half of what we ask for. So did you file this with
a cushion, this 39 percent?
Ms. Braly. Cindy can speak to that specifically. I think it
is important to note that when you look at the individual
products in California, because of our participation in the
HIPAA and what is called the Mr. Met graduate program, a high-
risk pool option. We did have in 2009 a $68.9 loss when
combined with the individuals who buy the products in the open
market. Our loss was about $10 million altogether. So when we
price this product for the rates for 2010 that were filed with
the Department, they assumed we would have a margin of about
2.4 percent or an after-tax margin of about 1.4 percent.
Mr. Stupak. And you feel that even though you knew you were
going to get significant negative publicity because of those
facts, you would be able to justify what the rates were?
Ms. Braly. The rates, on average----
Mr. Stupak. You can do it. You can add publicity, right?
Ms. Braly. It is a difficult situation, and even to break
even, the rates would have been in the 20s in terms of overall
average, the overall average. And we were concerned which is
why we also capped the rates at the top and at 39 percent
because we did not want rates for individuals to go in excess
of that cap.
Mr. Burgess. I am going to run out of time, and I must ask
because it has come up already. Do you have doctors who are
unconscionably raising their rates in your network? My
experience with most insurance companies was we took what you
gave us. We really didn't negotiate. With all respect to the
Chairman, Medicare sets the rates, you guys come in and say we
will pay a percentage of Medicare, take it or leave it and that
is the end of it. That is the so-called negotiation that we
went through. Is California substantially different from Texas?
Ms. Braly. No, we can talk about what the trend is with the
physician trend versus the hospital trend is a much more
significant driver, and the pharmaceutical trend is a much more
significant driver than that.
Mr. Burgess. Thank you. The hospital trend and the
pharmaceutical trend is a much more significant driver.
Ms. Braly. Right.
Mr. Burgess. If you took all physician reimbursement off
the table, you would have a one-time savings of from what I
read anywhere between 5 and 18 percent. It is not the biggest
driver in your book of business, I suspect.
Ms. Braly. We think the physician trend is around 6 percent
in California.
Mr. Burgess. That sounds----
Ms. Braly. And so the hospital trend is 10 and the pharmacy
trend is 13.
Mr. Burgess. And of course, all of the expenditures do flow
through generally through the physician, that is, if a
physician doesn't write the order, write the script, the
patient doesn't get the treatment or the prescription.
So although they are a very small part of the actual cash
outlay, they do control or they tend to be a driver or a
constrictor of costs. I have always wondered why we try to
ratchet down physician payments. Doctors are normal people that
you say we are going to ratchet it down? We try to do more to
catch up, and therefore we see more patients, order more tests,
write more prescriptions just because our throughput has to
increase in order to pay our overhead. Have you guys ever
looked at a corporate level of maybe if we pay doctors
differently we could actually get control of this cost curve?
Ms. Braly. Absolutely. We think the partnership with
doctors is the key to changing the reimbursement system so that
we are paying for outcomes rather than----
Mr. Burgess. Now, you know that there is a representative
in California named Pete Stark who will not allow that sort of
interaction to occur, right? That partnership between doctors,
insurers and hospitals?
Ms. Braly. I think that is an important part of the future
of the reimbursement system, to partner with doctors, to look
at different ways to reimburse----
Mr. Burgess. But we can't. Under Stark laws, we will all go
to jail. So that is off the table. Is there any other way we
could do that?
Ms. Braly. We think there are elements around medical
malpractice reform where if doctors understood that they would
be protected if they followed evidence-based medicine, that
question that you raised, you know, the most expensive thing in
healthcare is the pen and the doctor's hand. If we can make the
doctors, you know, protected and be willing to and be able to
focus on evidence-based medicine, then I think we will get at
those procedures or those tests or diagnostic tools that may be
used successfully.
Mr. Burgess. Yes, unfortunately that is one thing that is
off the table in tomorrow's discussion. We really aren't going
to talk about tort reform, I don't think, other than a very
superficial way. We will say caps, they will say no way and
that will be the end of the discussion. Thank you.
Mr. Stupak. Thank you, Mr. Burgess. Maybe we can get a
chance to get another round in. Mr. Chairman, Mr. Waxman.
Mr. Waxman. Thank you very much, Mr. Stupak. California has
a tort reform law. In fact, we have the law that the American
Medical Association would like to have for the rest of the
country. Are you saying that that has held down costs in
California?
Ms. Braly. Well, clearly the costs in California continue
to rise, and we have a number of issues that relate to
healthcare costs in California. For example, we have seen----
Mr. Waxman. Well, I don't want to know all the issues, but
you said if we had a medical malpractice system, that would be
one way to hold down costs. California has one. It hasn't been
sufficient to hold down costs to keep you from raising the
premiums, you asked for 25 percent increase. In your written
statement you said raising our premium was not something we
wanted to do. So your senior executives as WellPoint determined
that a rate increase averaging approximately 25 percent was
necessary, is that right?
Ms. Braly. That is correct.
Mr. Waxman. OK. Now, I would like to ask you about a
document produced from your internal files at WellPoint. On
October 24, 2009, Mr. Shane, a Senior WellPoint Actuary,
emailed Mr. Sassi, the head of WellPoint's Individual Market
Division, and let me put up that email.
[Slide]
Mr. Waxman. Mr. Shane writes that WellPoint executive must
reach agreement on a filing strategy quickly, specifically in
the area of do we file with a cushion, allow for negotiations,
or do we file at a lower level that does not allow for
negotiations. This email says that you were considering filing
a rate increase that was padded because you expected California
to reduce your proposed increase. Is that an accurate
conclusion to reach?
Ms. Braly. I don't believe so, and Cindy described these
emails--earlier in the process there was a question of what the
medical trend would be. What we filed did have a margin of 2.4
percent on an operating margin basis or 1.4 percent. And it
reflected the trend that we were experiencing in California. So
there was not a cushion in the rate that was filed.
Mr. Waxman. Well, it is hard to understand these words
differently because the words say a cushion allowed for
negotiation. You decided you needed 25 percent, but it sounds
like you were willing to go to 20 percent. There was a
presentation prepared for your board of directors. The
presentation outlined WellPoint's strategic plan for individual
line of business for 2010, and let me put that slide up on the
board.
[Slide]
Mr. Waxman. This slide is titled, Key Assumption:
Individual Pricing. It distinguishes between your rate ask and
the actual rate increase you are assuming for 2010. And
according to this slide, the 2010 rate ask is listed as 25
percent to 26 percent, but the assumed 2010 rate increase is
just 20 percent. This seems to say that you were asking for a
25 percent increase but expected to see that lowered to 20
percent through negotiations. That sounds like padding. How do
you respond?
Ms. Miller. I will respond to that since my team was
responsible for the rate filings. It is important to note that
this was prepared before the rate filing, before the rates were
finalized, and it recognized the fact, the political reality
that departments of insurance have political pressures and
often will change rates in response to those pressures. What
turned out to happen is that medical costs continue to escalate
through the latter part, the last three months of 2009, and the
25 percent rate increase became necessary to achieve, as Angela
said, a profit margin of less than 2 percent on an after-tax
basis.
Mr. Waxman. Well, it sounds like what you are saying is you
prepared to ask for a rate higher than what you needed as a
negotiating tool. You could have anticipated rates were going
to go up, and you had to make a decision. You wanted an average
increase of 15 percent, but you were really looking at an
average increase of 20 percent. You can see the document says
assumes 2-month approval delay, lowering rate increase 5
percent. This says exactly the same thing as a presentation to
your board. It says that you are asking for more than you need
because you build in a large cushion. Here is what I think is
going on. You are raising your rates far above what is
necessary. You are trying to squeeze every dollar of profit you
can out of policyholders in California and across the Nation,
and at a time when families across the Nation are struggling to
pay their bills, you are trying to charge them inflated rates
that pad your profits and support the salaries and the trips
and the treats and everything else.
Ms. Braly. Mr. Chairman, we have described in 2009 in the
individual business in California, our prices were not adequate
to cover the losses, for example, in guarantee issue part of
the products that are required to be covered, and we had a
loss. And our pricing that was filed and certified or reviewed
and evaluated by other actuaries confirmed that the----
Mr. Waxman. Other actuaries, meaning the state actuaries?
Ms. Braly. Milliman came in specifically at our request to
evaluate----
Mr. Waxman. You indicated you were trying to be more
efficient to hold down these costs. Is the biggest deficiency
that you produce trying to shift people onto plans where they
have to come up with more money out of pocket so that you don't
have to pay that amount?
Ms. Braly. No. In fact, we could be making less money when
those members shift to products that have less benefits. Our
goal is to make sure that we have product offerings for----
Mr. Waxman. Well, we heard three witnesses this morning as
did you. You were sitting here. All three of them seemed
reasonably healthy, but all three of them were told they were
going to get a 39 percent increase, not the average of 20 or
25, 39 percent increase. But they were in luck. They could get
a plan that would cost less, they just have to pay more out of
pocket for their drugs because you wouldn't cover the brand-
name drugs or they would have to come up with greater or higher
deductibles. Is that efficient?
Ms. Braly. What we try to do----
Mr. Waxman. Is that inefficiency?
Ms. Braly [continuing]. Is we try to make sure that the
customer can get access to a product that they want and afford
and provides them the benefits they need. For example, last
year----
Mr. Waxman. Well, they would like to have what they have
been paying for and not have to have increases every year that
they have been seeing.
Ms. Braly. And as reflected, as the pool of insured changes
because sometimes healthy younger individuals leave and we have
people that stay in the pool that are more expensive. The cost
overall of the pool continues to go up. That is the critical--
--
Mr. Waxman. So you would argue that we need a pool that
includes everybody, is that right?
Ms. Braly. Correct, that is----
Mr. Waxman. Therefore if you are pooling people together,
then you don't need these individual risk analyses because you
are spreading the cost. Is that what you are telling us?
Ms. Braly. We are an advocate for reform that would include
the elimination of preexisting conditions provided that there
is a mechanism to keep everyone in the pool so that you don't
have this phenomenon.
Mr. Waxman. That is what the bill does that passed the
house. That is what the bill does in the Senate. That is what
the President has been calling for. Let us get everybody
insured, and let us put them in a pool and then you spread the
risk. What the individual insurance markets seem to be doing,
if you have got an illness, you are not even going to be
considered for consideration. If you are in the plan and you
have got some illnesses, we are not going to drop you but we
are going to shift you to another plan where you pay more money
out of pocket. And you are individualizing insurance so that
the individual has no leverage. They have to pay what you ask
or drop down to something else.
Ms. Braly. The actuary analysis is not based on an
individual's health status. It is based on who is in the pool.
But to your point about the healthcare reform, I think it is
important. The concept and the goal was to eliminate
preexisting and get everyone in the pool. But what happened in
both of the bills that we have seen is that the effectiveness
of keeping someone in the pool really fell apart as the
legislation was moving forward. And the great concern is you
wouldn't keep everyone in the pool because you don't have the
right mechanisms in place to keep them in the pool and they
would opt out.
Mr. Waxman. What would you do to keep people in the pool?
Ms. Braly. We would make sure that there was a continuous
coverage requirement so if----
Mr. Waxman. Somebody says I don't want insurance. What
would you do? What would you do to that individual or family
that says, I don't want to pay this. I can't afford it. I'm not
going to pay it. What do you do to them?
Ms. Braly. Right, and then there should be an enforceable
and effective penalty of some sort that catches all individuals
and a requirement to have continuous coverage because people
jump in and out of coverage in Massachusetts where there is a
mandate. They jump in, consume healthcare, dump their policy,
jump out, and the costs continue to escalate because they dealt
with coverage and not cost.
Mr. Waxman. I think we tried in that House bill to cover
everybody and require that everybody get coverage, spread the
costs out, and we didn't get a lot of support from the
insurance industry for the House bill, let alone the Senate
bill.
I have certainly gone way beyond my time. Thank you, Mr.
Chairman.
Mr. Stupak. Ms. Schakowsky for questions, please.
Ms. Schakowsky. First, Mr. Chairman, on behalf of
Representative Eshoo, I would like to add to the record a
letter that she wrote February 11, to Ms. Angela Braly. Could I
have unanimous consent?
Mr. Stupak. Without objection--let us see it first.
Ms. Schakowsky. OK. I will hand it to you.
[The information was unavailable at the time of printing.]
Ms. Schakowsky. In the letter that representative Eshoo
wrote, she quotes from your Anthem Blue Cross unit in an email
message urging your employees to oppose healthcare reform, and
it is reported to have said that reform proposals would ``cause
tens of millions of Americans to lose their private coverage.
And she makes the point that the 39 percent rate increase flies
in the face of this concern for those who would supposedly lose
coverage. I wonder if you could respond to that.
Ms. Braly. I would be happy to. We are very concerned with
the legislation that was being proposed because we didn't feel
like it addressed that concept of addressing, getting everyone
in the pool, and as a result, that, with combined with some
other changes that were proposed, including changing the age
rating. Our actuarial analysis, which we shared publicly and
have available on our Web site----
Ms. Schakowsky. What is the age rating you use?
Ms. Braly. It varies by state, and Cindy could probably
give the details around California, but constricting the age
restrictions, we found that individuals, young individuals, in
California would see in excess of 106 percent rate increase and
that was before trend. So that would be in addition to the
rising healthcare costs that we saw as well.
Ms. Schakowsky. You began by talking about how happy you
were to be here to talk about rate increases. I want to remind
you the name of this hearing. It is Premium Increases by Anthem
Blue Cross and the Individual Health Insurance Market. And what
I actually expected was not for you to come and lecture us
about what we should put in our bill but actually to explain to
us, and a good start would have been to answer some of the
concerns. I don't know if you were here for the testimony of
Jeremy Arnold who talked about a whopping 74 percent increase
that he has experienced or Julie Henriksen who I just
calculated pays $24,504 a year. And if I am correct, if I heard
you correctly, you never even met the deductible. So you paid
this amount, but you really didn't get any benefit from the
health insurance because you didn't meet the deductible, or
respond, and it would be nice if you would because she wrote
you letters talking about how she realized for months she had
been paying for a costly, unnecessary benefit, switch plans,
and finally did get a letter that her premiums were going to be
raised 38 percent, although she could change to a lesser
coverage and pay only 16 percent. Isn't that fabulous?
I do have a couple of questions, but I want to tell you
something, that I think that a 39 percent rate increase at a
time when people, Americans, are losing their jobs, losing
their healthcare, is so incredibly audacious, so irresponsible.
You know, we see these lavish retreat places. I would be
interested to know what your salary is as the CEO, the
incredible CEO salaries. I don't know how many people it was
said that make over $1 million a year at your company. How much
money do you make?
Ms. Braly. My salary is $1.1 million. I receive stock
compensation. I received stock compensation with the value of
$8.5 million, and last year an annual incentive payment of
$73,000.
Ms. Schakowsky. Well, of course, it makes sense then that
you would need a big rate increase now that you told us that.
You said in your written testimony that Anthem Blue Cross
profit margin is in line with and below that of many of your
competitors. Can you name any California competitors who have
raised their rates up to 39 percent?
Ms. Braly. Yes, we believe that a number of our competitors
have raise rates. In fact, in the individual market, there are
products that are available. Our products are competitively
priced and in many cases lower priced than many of our
competitors, both for-profit and not-for-profit----
Ms. Schakowsky. They got approved by the commission for
more than----
Ms. Braly. They are outstanding and available now.
Ms. Schakowsky [continuing]. 39 percent?
Ms. Braly. We are a very efficient company on a relative
basis, and our administrative costs continue to go down. And so
we do have very competitive rates in the marketplace. Many
times they are less expensive than other products that are
currently available. And there are a number of competitors in
California, and our rates are quite competitive in the
marketplace.
If I could address your earlier question----
Ms. Schakowsky. No. I have another question. Has your
company met the legal requirement to use 70 percent of premiums
collected in the individual market for the payment of medical
claims?
Ms. Braly. Yes, we have submitted those filings and believe
they are compliant with the requirement. You have to keep in
mind that product is the product sold in a commercial market,
that the losses that are incurred in the HIPAA and the
Mistermet graduate program are borne in that marketplace as
well. So in the end, the individual marketplace lost money in
2009, and would produce an after-tax return of 1.4 percent----
Ms. Schakowsky. So when you figure your profits, you don't
figure it across the company? You look just at the profits made
or lost in the individual market?
Ms. Braly. Yes, and there are some very important reasons
actuarially to make sure you price the product for the costs
that are being incurred in those products. Cindy, you might
talk about the potential----
Ms. Schakowsky. No, I don't want to hear about it.
Ms. Braly [continuing]. Adverse----
Ms. Schakowsky. I don't want to hear because it seems to me
that when you have a company that is providing not widgets and
not some luxury item but healthcare, that it might make sense
to look across the whole company to see what kind of profits
because people who are in the individual market are often least
able to be able to come up with these very high rates.
What would you think about an 80 or 85 percent medical loss
ratio?
Ms. Braly. You know, our medical loss ratio as an
enterprise is 82.6 for 2009. And you know, one thing that is
really important about the individual market, we in some
states, where there has been regulation that really tries to
restrict the ability to raise rates, all the competition has
left. We are Blue Cross/Blue Shield. If you look at Maine, in
1993 there were 11 carriers in Maine offering products in the
individual market. Now there is us and another company that is
not a major national competitor because we are Blue Cross and
we have geography licensure, and we don't want to leave the
individual market. And so we need to make sure that it is a
viable marketplace for our customers so we can continue to
cover their costs. So as they incur healthcare costs, we are
there to provide and pay for those costs.
Ms. Schakowsky. I yield back.
Mr. Stupak. Nothing to yield. Let me go to Mr. Welch of
Vermont for questioning.
Mr. Welch. Thank you very much, Mr. Chairman. Ms. Braly, on
our last panel we did hear from some Anthem policyholders who
have had very high rate increases. Two of the policyholders had
premiums that were being raised 38 percent. The third had a
rate notification increase to 30 percent. All of those were
markedly higher than the average increase that WellPoint has
reported publicly. And the current rate increases put the
policyholder in a tough position. They can drop insurance
altogether or try to get a much less comprehensive policy. And
I would like to show you and Ms. Miller a document that
suggests that these rate increases in fact could be much higher
in the future. You can find this chart at Tab o7 of the
document binder. And this, as you know, is a WellPoint internal
analysis of the potential rate increases which was included as
part of the individual leadership pricing memo, a document
providing recommendations and analysis about the individual
market in California. And I would like to put this document on
the screen. Do we have that document up?
[Slide]
Mr. Welch. OK. Thank you. Ms. Miller, as WellPoint's Chief
Actuary, I want to make certain I understand the three
scenarios proposed by WellPoint officials in this document.
Scenario one, and I don't think this is on the screen, appears
to propose that WellPoint make no change in SAFs or rate
increase caps, right?
Ms. Miller. That is correct.
Mr. Welch. And then scenario two appears to propose a
reduction in the rate caps by 2 percent after accounting for
age. So am I reading that correctly?
Ms. Miller. Yes.
Mr. Welch. And then scenario three which is the focus of
attention here, that is the chart that caught my attention. It
appears to consider the possibility of removing rate increase
caps altogether, and the document states, and I quote, ``Remove
SAFs completely.'' And then below that header is a chart that
shows that if WellPoint in fact implemented this program,
taking away the rate caps, removing them entirely for certain
plans, over 27,000 policyholders would be subject to a 228.4
percent increase in their monthly premiums. Is that right?
Ms. Miller. I don't see the number of policyholders that
you are referencing on the one that is in our book. But I do
see the 228 percent.
Mr. Welch. OK. So if we took the caps off, under your
internal analysis, if I were a WellPoint policyholder subject
to this situation, I could be receiving a 228 percent increase
in my premium cost?
Ms. Miller. Yes, I would like to point out that these are
labeled scenarios, not proposals. When we do our actuarial
work, you start by looking at the rate increases that are
necessary for----
Mr. Welch. The scenario----
Ms. Miller. It could have been the starting point, and it
is meant to illustrate that if we didn't cap, these would be
the increases. We did in fact cap the rates. This was not a
proposal. It was just in order to illustrate, you know, how
dramatic some of the increases would be if we had to do that.
Mr. Welch. I get that. You are saying that if you had caps
off, by your analysis, you might actually in order to maintain
using Ms. Braly language, a viable marketplace would require
you to raise my premium by 228 percent. That is where we are
headed. I mean, this is the problem. That's where we are
headed.
Do you consider, Ms. Braly, that it is a viable marketplace
if a machine tool company who has got 15 workers that they have
been loyal to and the workers have been loyal to them, and they
are trying to hang onto the jobs and they are trying to hang
onto health benefits, they get a notice in the mail saying that
they are going to get a 228 percent premium increase. Is that
sustainable?
Ms. Braly. Absolutely not, which is why we need to focus on
the rising health care costs, and we think we are an important
part of that mechanism in healthcare.
Mr. Welch. Well, you know, that is pretty self-serving. I
mean, if your medical loss ratio is you said about 82 percent,
you know, just years ago the medical loss ratio was in the
range of 95 percent. So there a business model that is working
for you as an insurer so that you can pay your salaries,
maintain your bottom line, but it is coming at great expense to
other people.
Ms. Braly. Our administrative expense, you know, really
does go to focus on disease management. We have 2500 nurses who
work with our customers to make sure they are getting the
benefits----
Mr. Welch. You know, Ms. Braly, I don't mean to interrupt.
We have got a situation here that your own internal analysis
suggest the obvious conclusion. It is not sustainable. I mean,
if left to strict marketplace interpretation of what is
``market viability'', that being as I understand it, what you
would have to charge in order to maintain the financial
solvency of your business. If that requires charging that
machine tool company 228 percent, that is not a market that is
viable to anybody who is on the receiving end of that premium
rate increase. So it suggests that the market model that we
have is fundamentally broken.
Ms. Braly. We agree that we need a sustainable solution to
this difficult problem, particularly in the individual market
where we see these issues extremely in terms of the rate
increases which is why we are an advocate----
Mr. Welch. So basically you are in agreement with the
proposition that I just made, that the current insurance model
is fundamentally broken where the premiums are going up
potentially 228 percent?
Ms. Braly. I think we need to continue to create an
opportunity for both consumers to be better purchasers of
healthcare and understand the dynamics which we are doing
through investment, as well as continue to innovate around how
we fundamentally change the----
Mr. Welch. When you say the consumer can be a better
purchaser of healthcare, when you send out your premium notice,
whether it is 40 percent or potentially 228 percent, and when
someone calls, do you negotiate the rate for them?
Ms. Braly. We have a mechanism where we do work with our
customers to make sure that they can get another product
potentially that they can afford or that has benefits that they
want or need or not the benefits that they don't want----
Mr. Welch. How can you--literally, I mean, again, I am
not----
Mr. Stupak. Go ahead, finish it up, and then that is going
to be it.
Mr. Welch. Well, I think the point has been made here.
Thank you, Mr. Chairman.
Mr. Stupak. Thank you, Mr. Welch. Ms. Capps for questions,
please? Thank you for being here today, too.
Mrs. Capps. Thank you, Mr. Chairman, it is an honor to be
with your Subcommittee. I see a couple of the members of the
previous panel. Before I address the current panel, I just want
to say thank you for being such wonderful witnesses. You spoke
for a lot of my constituents. I represent a district on the
central coast of California, and their stories are so similar
to yours, and they were very eloquent. I had to leave, and so I
wasn't able to say that to you and allow you to expound even
more.
But to this panel, listening to a couple of my colleagues
and your responses too them just makes the case for me as one
member of Congress that we really do need a lot more
competition within the health insurance market.
Here is a story from one of my constituents, in a quote.
``We as many others have received a notice from Anthem that our
health insurance premium will increase by 30 percent starting
March 1. My husband and I are both self-employed. We currently
afford a PPO with a 5 deductible. And now Anthem, being so
understanding, is offering a $7,500 deductible. If anything
serious happens to our health, we lose everything to pay our
medical bills, even though we technically have insurance.''
Here is another constituent. ``I am a 61-year-old male with
individual health insurance from Anthem Blue Cross. I just
received a notice of a rate increase from $616 a month to $881
a month.'' Another says this. ``The premium on my Anthem Blue
Cross health insurance policy is going up from $545 per month
to $712 as of March 1. I want you to be aware,'' she writes to
me, ``of this 30 percent hike in insurance rates.
Ms. Braly, these are hardworking people, I know, who have
no choice but to purchase health insurance on the individual
market. Yet it doesn't seem like they get much for it. You
claim you must raise prices in order to make up for healthy
people who drop out of the system. But isn't it true that you
have long engaged in the practice of rescission? I am well
aware that Anthem has been fined for doing that in years past.
And knowing that it may well drop me as a consumer who, in the
even that I would become sick, is certainly not an attractive
enticement for me to help as a healthy customer to join forces
so that you can help to keep your costs down. You don't market
yourselves very well. At a time when your company is bringing
in record profits, but when the rest of our economy is
suffering, I want to know what steps you are going to take now
to make quality health insurance products affordable to the
people like my constituents who want to be responsible and want
to purchase health insurance but just can't do that. Do you
want to respond quickly? I have another----
Ms. Braly. I would. Thank you. Thank you for the
opportunity to talk about what we are doing to try to make
healthcare premiums more affordable. For example, when we
negotiate with hospitals in California, our goal is to have
zero increases. Often those hospitals come to us requesting a
40-percent increase, and if there is not competition among
hospitals, the regulars have said that it is inappropriate for
us to terminate those hospitals from our network because then
we would have an access problem. So as a result, we don't have
the ability to, you know, not agree to those very high rate
increases form the hospitals. So we are going to continue to
fight on behalf of our customers to make sure that the
healthcare they are receiving is affordable and high quality.
And it is a difficult fight. It is one that we keep doing. It
is why we sold our pharmacy benefit management company so we
could get access to lower cost drugs because those costs are
driving the overall increase in----
Mrs. Capps. So you are shifting the blame to the hospitals
pretty much. Just summarizing.
Ms. Braly. We are working together to make sure we can
address that.
Mrs. Capps. There is nothing within your own system that
you can find any flaws with.
Ms. Braly. We continue to work on our efficiency. In fact,
if you look at our administrative efficiency ratio, we continue
to improve our efficiency as an organization, while we provide
more services in terms of getting to that underlying healthcare
cost. We will continue to do that.
Mrs. Capps. I am going to just again address the topic that
has come up. I saw slides shown of the places where you hold
your retreats. This is a sticking point. It is not the whole
story, but it is one that because it is so visible, it is
pretty galling for people who have had to sacrifice their
vacations now for the past two or three years because of the
economy and what it is doing to their personal lives. And yet--
and I am going to finish and then I am going to give you the
rest of the time to respond. You have continued to make these
retreats a part of your working relationship and offering these
to your employees. Consumers are making sacrifices in order to
hold onto their health insurance as the premiums go up and then
as they face being denied. These retreats hold more sway with
your company than the health and well-being of your
subscribers, and I will allow you any seconds I have left to--
--
Ms. Braly. Yes, those meetings have been characterized as
retreats for our associates, and that is incorrect. Those
meetings that were described are meetings that we have with our
customers, meetings----
Mrs. Capps. Which customers?
Ms. Braly. Often I meet quarterly with representatives for
our customers, our customer advisory groups and----
Mrs. Capps. Who are those people?
Ms. Braly. They are representatives from our customers, so
business people who buy the benefits on behalf of group
customers----
Mrs. Capps. So you are selling your benefits at those
lavish resorts?
Ms. Braly. We are meeting with--brokers and agents. You
heard one of the panelists say she was going to work with her
agent to understand what her options are.
Mrs. Capps. Well, that is where her agent was when she was
trying to get a hold of her.
Ms. Braly. We make sure that our agents and brokers
consultants and customers know what our benefits are, know what
plans and services we can provide to them. We do some----
Mrs. Capps. And you justified that cost as you are raising
the premiums?
Ms. Braly. No, we continue to focus on making sure we are
more efficient. We do need to meet with people that are agents,
brokers and customers. We find that they provide input to us in
terms of how we improve the services and benefits that we
provide to--in the case of----
Mrs. Capps. Do you ever meet with your premium holders? Do
you ever talk with them?
Ms. Braly. I do, and I am delighted to, and I appreciate
the opportunity when I get. And yes, I----
Mrs. Capps. Did you hear their stories in addition to the
stories you heard this morning?
Ms. Braly. It is a challenge, believe me. We are on their
side. We want to----
Mrs. Capps. They don't feel like it.
Ms. Braly. And we want them to understand there is so much
misinformation about what is driving these premium increases.
And I think it is important for people to understand the
margins that are available to pharmaceutical companies and in
hospitals and where we stand on a relative basis because we are
fighting every day to make sure we can make their health
benefits more afford able.
Mrs. Capps. Thank you, Mr. Chairman.
Mr. Stupak. Thank you. There was a request earlier that a
letter dated February 11, 2010, from Anna Eshoo, member of this
Committee and Member of Congress, to Ms. Braly be entered in
record. Without objection, it will be entered.
Second round of questions, Mr. Waxman.
Mr. Waxman. Thank you, Mr. Chairman. You have said a couple
of times, you want to make healthcare services for your
beneficiaries. You want to provide more services for them. You
want to provide more efficient services for them. You want to
provide good services for them. Is that what you have been
saying?
Ms. Braly. Yes.
Mr. Waxman. You see that as your role?
Ms. Braly. We see it as a critical role, for us to get them
access to affordable quality healthcare. And we, by providing
services that we do, we think that creates real value for the
customer.
Mr. Waxman. Well, some of these documents paint a different
picture. There is a document that is titled WellPoint
individual 2010 plan. Opportunities not reflected in the
forecast. It is a business plan, and under this business plan
there is a section called risk management, and it says, our
medical loss ratios should improve as we eliminate subsidies
and other risk management initiatives. And then you have a
number of initiatives. One of the issues is to take preexisting
waiting periods and adjust them to be either 12 months or the
legal maximum if less. So you want to make sure--they have to
wait, if they wait they have a preexisting condition, to wait
as long as the maximum will allow. Secondly, reinstatements
will only be allowed for a period of 60 days after termination
and will require underwriting and payment of back premiums. So
that is going to make it more difficult for people to get back
into getting access to this good quality care.
Does WellPoint have initiatives to reduce the amount of
premium dollars that are used to pay for medical claims?
Ms. Braly. We have a number of initiatives to try to reduce
medical costs, period. And then----
Mr. Waxman. Well, how about reduce, not just medical costs,
but medical services?
Ms. Braly. We want to make sure that our members get access
to the quality care they need at the right setting at the right
time. So if we are avoiding a fraudulent expense or an
unnecessary expense, yes, we want to----
Mr. Waxman. Well, not fraudulent or unnecessary. You are
saying that people have preexisting conditions. You are going
to make them wait as long as possible before they can get care
and----
Ms. Braly. No, I was talking----
Mr. Waxman [continuing]. There is another document, let me
put it up on the screen. It is Tab 14.
[Slide]
Mr. Waxman. In this document, WellPoint executives
identified key issues confronting the individual market, and
they stated, lack of attention to risk management, decreased
ability to use preexisting claim denials and rescind policies
and maternity policy have led to our first-year loss ratios
climbing from less than 50 percent 5 years ago to over 65
percent. So these documents seem to indicate that senior
executives are actively considering steps to reduce the amount
of premium benefits that are used to pay for medical claims. If
you are going to reduce payment for claims, you are reducing
payment for claims for legitimate medical services.
Ms. Miller. We are trying to make sure that the pool of
members that we have is not disadvantaged in the marketplace.
One of the reasons that our rates are going up so much in 2010
is that healthy people are making a choice when faced with the
hardship of the premium increases they are seeing. We recognize
that there are hardships----
Mr. Waxman. What does a medical loss ratio mean?
Ms. Miller. What is medical loss ratio?
Mr. Waxman. Yes, what does that mean?
Ms. Miller. It is the claims, the medical claims paid,
divided by the premium.
Mr. Waxman. So you are trying to reduce the amount of
claims you will pay for people in order to make sure that you
are still within the medical loss ratio but you can reduce the
claims for people, isn't that right?
Ms. Miller. No, you can't reduce claims without changing
your medical loss ratio. That is not possible.
Mr. Waxman. OK. Well, if you are looking for ways in a
business strategy to manage the risks, they all sound very
nice, managing the risk. And then the ways you do that is to
deny people access to care so you don't have to pay for that
care for a longer period of time. That sounds like you want to
make sure that you have got less money going into paying for
care.
Ms. Miller. No, specifically in the individual market in
California, there is a minimum loss ratio requirement that we
comply with. In fact, in the HIPAA guarantee issue products
that we described, the medical loss ratios or medical cost
ratios exceed by far the premium increases that we can----
Mr. Waxman. The reason that you have a medical loss ratio
is we want to guarantee that insurance companies are using
premium dollars to pay for medical care for the customers and
not for overhead, corporate expenses, and profits.
Ms. Miller. Which is why our----
Mr. Waxman. You have to balance that out. But it sounds
like your people were looking at business strategies to reduce
the amount of payment of the premium dollars for the medical
care for the customers.
Ms. Braly. Actually, if we take some of those risk
management ideas, we can potentially reduce the cost for the
overall pool and therefore not have such significant----
Mr. Waxman. But for the individual involved, that
individual is not going to have access to more efficient care.
They are not going to have access to good services, they are
not going to have access at all because you are going to hold
down the cost for the overall pool. But that individual is
going to have to go without or pay for the services that you
wouldn't otherwise pay for.
Ms. Braly. And that is one of the critical elements about
our reform. If an individual doesn't buy his or her policy when
they are well and there is an underwritten market, then if we
allow them, like we do in some markets where we have guarantee
issue, like New York and Maine, to wait until they are sick to
buy the policy, then they won't buy the policy----
Mr. Waxman. Nobody wants to do that----
Ms. Braly [continuing]. Until they are sick.
Mr. Waxman [continuing]. But you have got people covered,
and your business--and you can't drop them because the law
won't let you drop them.
Ms. Braly. That is correct, and we don't want to.
Mr. Waxman. So you have got people covered, and then you
want to shift more costs onto them and use more of the premiums
for overhead instead of for services. What I think we need is
meaningful health reform to guarantee that the insurance
companies are using premium dollars to pay for medical care for
the customers and not for the overhead, corporate expenses and
profits. What is the bill, what do we have? We have 80 percent
requirement that the money collected by premiums be used to pay
for health insurance claims.
Ms. Braly. Right.
Mr. Waxman. You are at 85 percent. You don't do that now,
do you?
Ms. Braly. We are at 82.6 percent. I want to address that
question, though, too. You know, every administrative dollar
that we spend, we want to produce a lower cost of care as a
result of that. So we make investments in things like----
Mr. Waxman. You don't produce a lower cost of care, you
produce a certain amount of--to meet the ratio, a certain
amount to make sure that you are meeting your expenses and your
profits. But people are being denied care, and that is why I
think health insurance reform is so necessary, and I dispute
your statement, although I don't have time to go into it, that
this bill does not bring more people into the pool. And
individual has no power to deal with you, but if they are
pooled together with others, then those people have the
opportunity under healthcare legislation to say we want to make
sure that 85 percent of the money that you collect from us pays
our healthcare claims, not more money going to retreats and
expenses and salaries. We want it for that purpose, and then
you can spread the costs out. Thank you, Mr. Chairman.
Mr. Stupak. Mr. Burgess for questions, please.
Mr. Burgess. Thank you. Let me just clarify. On the AMA,
American Medical Association site last night, and of course
they are not your biggest ally or fan, but they reported a
medical loss ratio for WellPoint at 84.8 percent which is right
at that 85 percent figure that was mandated in the bill. Is
that for the whole company and it is different in California?
Ms. Braly. They may be looking at statutory financial
statements versus gap. The gap statements show for year-end. We
were at 82.6 which is enterprise-wide. So I am not sure exactly
where they are at 84.8, but there are many products in which--
--
Mr. Burgess. They Tweeted it, so I know it is right.
Ms. Braly. Right.
Mr. Burgess. Let me ask you a question. I thought Blue
Cross was non-profit. We have all this discussion of profits
today, I always thought when I was in practice that Blue Cross
was a non-profit.
Ms. Braly. There are many companies who have Blue Cross
licenses. We are a for-profit company, but as we have
described, the not-for-profit companies continue to have
margins sometimes in excess of ours because we have come
together as former Blue Cross independent states, and we have
created a lot of efficiency and scale at WellPoint. So we are a
more efficient Blue Cross plan but we are for-profit Blue Cross
plan.
Mr. Burgess. One of the areas, and I am sorry Mr. Waxman is
gone, but one of the areas where I disagree with Mr. Waxman but
you agree with him is that we need a mandate, an enforceable
mandate, a rigid mandate in this healthcare bill. Mandates are
an anathema in a free society, and my submission is that they
do not work. We have a tremendous mandate right now with the
IRS. Everybody knows you have got to pay your income taxes, and
if you don't, you may not be exactly sure of the penalties but
you know it is bad and you don't want to find out. And our
compliance with the IRS is about 85 percent. Well, we have 15
percent of the people uninsured in a voluntary system in this
country, so I don't know how much more compliance we get by
going to a mandate, and yet we ask honest people to give up
significant freedoms. When we did the Medicare Part D program
several years ago, and part of my job as a member of Congress
was to go out and talk to people about the changes coming to
Medicare, and I can't tell you the number of people who would
tell me that you can't make me take that prescription drug
benefit. No, ma'am, I am not here to make you take it, it is
there for you if you want it. Well, you can't make me take it.
I said, no, that is right. You can do what you are doing right
now, and that is oK. You can't make me take it. Well, what are
you doing right now? Well, I don't have drug coverage. You can
keep it. You can keep that non-coverage as long as you want.
Now, there was a penalty involved, and we got a lot of
criticism for that, that if you didn't sign up in the open
enrollment period which at that point was six months after the
initiation, that people would pay a 10-percent premium for
coming into the system if you will after they got sick because
we were trying to make the benefit look more like insurance and
less like an entitlement. And you know, the story with Medicare
Part D, although it is not perfect is that it has provided a
benefit now to 92 or 93 percent of seniors have a credible
prescription drug coverage of some sort and 92 or 93 percent
are satisfied or very satisfied. So that is a pretty good track
record. Now, we did that without a mandate, and the model that
we should follow, in my opinion, is that model which is to
create programs people want. If you get a mandate, which is a
program you want, but if you get a mandate, then there is not
reason for you to try to compete for any of these subscribers'
business. And yet, how much better would it be if you said,
well, we are going to create programs that people want and will
want to stay with us over time. I wish I could have a
longitudinal relationship with my health insurance company. I
have with my car insurance company since I was 18 years old,
but health insurance, you shop around every year to get the
best deal when you are in small business or your employer shops
around for the best deal, and as a consequence, you don't get
to keep your insurer over time. One of the reasons I went with
a high deductible policy so I could have a longitudinal
relationship with my insurance company. We are far better off
if we construct programs that people want, rather than telling
them what they have to have.
Now, you have got, and I think it has already come up, that
increases in the California individual market can be as much as
106 percent under the confines of the House-passed bill, and
that is a pretty significant figure. Now, Mr. Stupak is
correct, none of the benefits start for 4 years, so it might
not happen to you right away but at some point, the cost of
those benefits is going to go up, and the truth is, no one
really knows because we do these budget scores but no one
really knows. Look how far off the mark we were when we passed
Medicare in 1965 with what it costs us today. And Mr. Waxman
talks about your medical loss ratio, look at our unfunded
liability in Medicare and Medicaid. I mean, that is what is
staring people in the face. Yes, we got a lot of problems here
we need to fix. They are complex problems that are really hard
to do. We need to do them. We have got a much bigger problem
staring us in the face which is the unfunded obligation that we
have with our existing public options if you will that those
bills are going to come due before any of us really had
planned. That is really where we need to be focusing right now.
We are not doing our part very well right now with Medicare and
Medicaid. Before 50 percent of the market that we pay for right
now, we are asking to go to 75 percent at the federal level.
That is a big ask for the American people. That is why we are
getting so much pushback on this bill. They don't think we are
doing a good job with what we have got now, and they don't want
to give us another 25 percent of that market.
Thank you, Mr. Chairman. I will yield back.
Mr. Stupak. Thank you, Mr. Burgess. Let me just sort of
wrap up a couple questions if I may. Ms. Braly, you indicated
that the drivers for this increase, the 39 percent increase you
are seeking, doctors were 6 percent, hospital was 4 percent I
think you said, and pharmaceutical, 13 percent, right?
Ms. Braly. No, hospital trend is about 10 percent, the
physician trend is 6 and the pharmaceutical trend is about 13
for California for the 2010 rates.
Mr. Stupak. OK, so that is about 29 percent. So does that
leave 10 percent then for administrative costs?
Ms. Braly. No, Cindy can take you through the different
elements that went into the price increases.
Mr. Stupak. No, I am just trying to keep this simple so
average lay people like me can understand how you come up with
39 percent if your projected, and these are all projected,
right, Doctor, 6 percent you said, hospital 10 percent,
pharmaceutical 13. What is the other driver then?
Ms. Braly. The trend, I am describing the trend in each of
those elements.
Mr. Stupak. OK. So your 39 percent, you are looking for
sort of a guesstimation what you are going to need?
Ms. Braly. No, Cindy can give you more detail in terms of
exactly how we got to the 39 percent because you have rising
healthcare costs. You also have what we call adverse
selection----
Mr. Stupak. Well, wait a minute.
Ms. Braly [continuing]. Due to the fact that a lot of the--
--
Mr. Stupak. Ms. Miller has submitted for the record, but
what is the driver then, doctor, pharmaceutical, hospital. What
else?
Ms. Braly. Correct. We are also having adverse selection
meaning the healthy people and their premium is going away.
Mr. Stupak. How many healthy people did you have last year
in your individual policies?
Ms. Braly. You know, we look at the whole pool----
Mr. Stupak. No, just how many people did you have?
Ms. Braly. We had 800,000 members.
Mr. Stupak. How many did you have this year in your
individual?
Ms. Braly. You know, we were expecting 25,000 on the
aggregate basis between the two regulated companies less that
we will have about 25,000.
Mr. Stupak. OK, but the individual policy, how many less
are you going to have?
Ms. Braly. About 25,000 less we think, we are projecting.
Mr. Stupak. OK.
Ms. Braly. What happens in the individual product----
Mr. Stupak. No, I understand.
Ms. Braly [continuing]. People are likely to come in and
out because they go into group policies.
Mr. Stupak. And because they can't afford it.
Ms. Braly. Pardon?
Mr. Stupak. And because they can't afford it. A lot of
people in this country every year go bare because they just
can't afford it----
Ms. Braly. Which is a loss----
Mr. Stupak [continuing]. Whether they are in a group, they
get unemployed or whatever it might be.
Ms. Braly. We want to have that customer and we want that
customer to have coverage.
Mr. Stupak. OK. You indicated earlier for 2009 your
corporate profits were 2.3, almost 2.4 billion because you sold
a management company, right?
Ms. Braly. Well, we sold a PBM, and we had operating
earnings as well.
Mr. Stupak. OK. What was your company profit then in 2008?
Ms. Braly. Our profit margin was 4.8 percent on a
relatively similar base. So actually, you know, the margin
was--well, 4.6 in '08, 4.8 is our overall margin in 2009.
Mr. Stupak. So that is about the same as 2009 then? So what
would that be in dollar signs then in 2008?
Ms. Braly. I am not sure exactly what. We probably had $62
billion worth of revenue total. So not a dissimilar number.
Mr. Stupak. So under 2.4?
Ms. Braly. We can get you the exact----
Mr. Stupak. So 2010 then, you anticipate again you are
going to be around $15 billion?
Ms. Braly. $15 billion? I'm sorry.
Mr. Stupak. Yes, isn't that what you said?
Ms. Braly. No.
Mr. Stupak. OK. Go ahead.
Ms. Braly. No, in 2010----
Mr. Stupak. 2010, where do you think you are going to be
profit wise?
Ms. Braly. We are actually going to have lower operating
earnings in 2010. It is a reflection of the economy and the
loss of our membership primarily in-
Mr. Stupak. But your profit will probably be what, 4.8
percent?
Ms. Braly. We expect it to be in the same range
potentially, yes.
Mr. Stupak. So you are already expecting at least for the
last 3 years, your profit will be the same?
Ms. Braly. It has been pretty steady in that range, 4.6,
4.8 would be appropriate, which on a relative basis, the other
parts of healthcare and many other industries is very modest.
Mr. Stupak. Well, you may think it is modest, but if you
are looking at a 39 percent increase or in Michigan when they
proposed 56 percent increase, that is not very modest to folks.
Ms. Braly. Yes, we are not Blue Cross/Blue Shield of
Michigan.
Mr. Stupak. I know you are not. I know you are not, but
Michigan Blue Cross/Blue Shield is a non-profit, you are a non-
profit.
Ms. Braly. No, we are for-profit.
Mr. Stupak. You are a for-profit. I am sorry. You are in
Maine, though, right, you said? And they have had double-digit
increase. You mentioned earlier about Maine being one of the
dominant players.
Ms. Braly. Maine is one of the places where we are one of
the few players left in the individual market because others
have left the market.
Mr. Stupak. Right, and less players in the market, the
easier to manipulate that market just because----
Ms. Braly. No, in fact----
Mr. Stupak [continuing]. Of your sheer size.
Ms. Braly. No, in fact what has happened is because the
regulatory environment in Maine and particularly in the
individual market was regulated the way it was, everyone left
except for us. We are a Blue Cross. We are not going to leave.
We are going to stay in our geography and continue to serve our
members.
Mr. Stupak. Well, you know, is expected to be 23 percent
this year, right?
Ms. Braly. We filed for a rate increase in Maine. The Maine
regulator has denied that, and we are in litigation with the
Main regulators about the ability, as provided in the statute,
to have an appropriate margin.
Mr. Stupak. Well, how about in Maine, is your doctor costs
there 6 percent or is it less in Maine?
Ms. Braly. In Maine, the doctor costs are very high, and on
a relative basis compared to other parts of the country, it is
one of the most highly----
Mr. Stupak. Yes, but is it 6 percent like California? I'm
looking for your drivers in Maine.
Ms. Braly. No, in fact we have a----
Mr. Stupak. You have your drivers in California which you
said was doctors was 6 percent, hospital, 10 percent----
Ms. Miller. The driver----
Mr. Stupak [continuing]. Pharmaceutical 13----
Ms. Miller. I can take that question, Mr. Chairman.
Mr. Stupak [continuing]. That is 29.
Ms. Miller. The driver----
Mr. Stupak. And so in Maine, what is it there?
Ms. Miller. Off the top of my head, I don't know the exact
trends in Maine. The driver in Maine is that it is guaranteed
issue, and there is no requirement for people----
Mr. Stupak. Well, guaranteed issue----
Ms. Miller. The people wait until they are sick to purchase
coverage, and it drives up the cost of care. Maine has one of
the highest healthcare costs in the country.
Mr. Stupak. Guaranteed issue is you are guaranteed to
present the policy and then it is up to the consumer whether or
not they can afford it. We call it purging in the business
world----
Ms. Miller. Absolutely, and what happens then----
Mr. Stupak [continuing]. And in the individual market it is
rescission.
Ms. Miller. Only people who know they are going to incur
healthcare costs more than the premium buy the policy, and that
is not a sustainable business model. And that is why all the
other insurers left the state because they were forced to lose
money in that business.
Mr. Stupak. That is not what the last panel said. They
don't take insurance because they expect to gain more than what
they paid. In fact, our last----
Ms. Miller. No----
Mr. Stupak [continuing]. Panel, they basically pay and
never really access it because you have such high deductibles
and co-pays and everything else.
Ms. Miller. Well, obviously there are people who are using
the coverage because otherwise, our medical loss ratio would be
zero. I mean, that is insurance. You buy it when you don't need
it so that it will be there when you do need it, and if
everybody waits until they need it to buy it, we result in the
situation that we have today in the individual marketplace
where we have escalating insurance costs, which is again why we
have talked about the fact that we need sustainable healthcare
reform. We need to address not just the insurance market
reforms which we agree need to occur, but you also have to
address the underlying cost of care. We are only charging the
costs that come through to us.
Mr. Stupak. Well, I still don't see how you justify 39
percent. I got up to 29 percent in your drivers and your
trend----
Ms. Miller. Thirty-nine percent was the high. The average
was 25.
Mr. Stupak. Right.
Ms. Braly. And Cindy, do you want to talk about each
element----
Mr. Stupak. It is amazing. We had three witnesses say they
are all at 39 percent. But you are saying the average----
Ms. Miller. I don't know how the panelists were selected,
and again, we don't like raising our rates that much. We know
it is a hardship on these people, but at the end of the day, if
you----
Mr. Stupak. Do you believe that you can actually raise your
rates where no one is going to want to take your policy
anymore?
Ms. Miller. Pardon?
Mr. Stupak. Do you think you are going to finally get to
the point where basically you are killing the goose that laid
the golden egg? No one is going to be able to afford you?
Ms. Braly. You know it is really an issue that we have got
to get to the underlying costs of care because we want access
to healthcare. There are wonderful advances, wonderful
technologies, and we want to make sure that we continue to have
access and our customers continue to have access, and it needs
to be affordable. And so we have to think about how----
Mr. Stupak. Do you believe there is going to be a point
where we can no longer afford it, individually?
Ms. Braly. I think we as human beings greatly value our
access to healthcare which is why we continue.
Mr. Stupak. I agree, and every family has to make a value
judgment. Can I afford it today or not? So when my rates go up
39 percent, as our first panel said, we look at it and pretty
soon it is going to be, can I afford it anymore or do I just
drop it and hope I don't get sick?
Ms. Braly. Which is why we are in the market saying we have
to get to reducing healthcare costs, making sure people aren't
getting unnecessary procedures or redundant procedures. We play
that important role in healthcare. To eliminate us from the
process eliminates the opportunity to get to that value
equation. Without us----
Mr. Stupak. I don't disagree with you, but for the average
family, when they are sitting there and they are saying my
rates just went up 39 percent or if you want to use your words,
the average in your case, 25 percent, and man, I can't afford
it anymore, it is as much as my house payment as the first
panel said, and then I look at the end of the year and darn it,
you made $2.358 billion and the salaries are in millions of
dollars for the executives, how can I sustain that because I am
the one who paid it, not them. And you are getting to the point
where no one can afford it.
Ms. Braly. And we are serving 34 million Americans across
the country, and our goal and desire is to try to get for them
affordable health benefits that they can continue to access,
the quality care, the drugs that they need and want----
Mr. Stupak. And it is not working when I came to Congress,
like our first panel, small businesspeople, 64 percent of
people had health insurance, would buy it. Now we are down to
about 34 percent. That is why we have to do something on
healthcare in this country because the cost is killing us.
Ms. Braly. And that is why we----
Mr. Stupak. And we are just going way over and arguing and
probably getting outside the scope of this hearing.
Mr. Burgess. Mr. Chairman, may I ask one last question of
our witness?
Mr. Stupak. Sure.
Mr. Burgess. We have a vote in a few minutes on repeal of
McCarren-Ferguson. Do you have an opinion as to whether or not
that is going to bring down healthcare costs?
Ms. Braly. You know, belief is it is not going to affect
healthcare costs one way or another.
Mr. Burgess. Is it going to affect your business? Is there
any good reason not to do it?
Ms. Braly. The unintended consequence that we worry about
for the McCarren-Ferguson repeal is that there are initiatives
to share data, with the evolution of health IT in particular.
If we can address some of the quality opportunities through the
sharing of data, we hate for those to be eliminated as part of
this process.
Mr. Burgess. But that would be true in anything, infection
control ideas. Identifying and aggregating data is going to be
critical in that.
Ms. Braly. Exactly, and that is why as health IT advances
and we are investing in that to make sure we can use that data
as meaningful information, we would hate for that to be
eliminated as an unintended consequence of that repeal.
Mr. Burgess. What about professional baseball? Would there
be any unintended consequences to----
Ms. Braly. No consequence to us.
Mr. Stupak. That is the Curt Flood case. You don't even
want to go there. With that, let me conclude this panel and
thank you both for being here and thank you for your testimony
today.
Ms. Braly. Thank you.
Ms. Miller. Thank you.
Mr. Stupak. That concludes all questioning. I want to thank
all of our witnesses for coming today and for their testimony.
The Committee rules provide that members have 10 days to submit
additional questions for the record. I ask unanimous consent
that the contents of our document binder be entered in the
record, provided the Committee staff may redact any information
that is business proprietary, relates to privacy concerns, or
is law enforcement sensitive. Without objection, our document
binder will be entered into the record.
Also, I ask unanimous consent, the letter from Mr. Dingell
to the National Association of Insurance Commissioners and
their response dated February 17, 2007, be submitted as part of
the record. Without objection, documents will be entered in the
record for Mr. Dingell.
[The information appears at the conclusion of the hearing.]
Mr. Stupak. That concludes our hearing. This meeting of the
Subcommittee is adjourned. Thank you all again.
[Whereupon, at 2:12 p.m., the Subcommittee was adjourned.]
[Material submitted for inclusion in the record follows:]
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