"CNBC Calls Out WellPoint CEO For Lying About How Much Money It Makes Off Its Consumers"
Today at the Clinton Global Initiative conference, CNBC hosts Mark Haines and Maria Bartiromo interviewed WellPoint CEO Angela Braly on the current health reform debate. Bartiromo pressed Braly on the topic of rescissions, an extremely controversial practice where health insurers find reasons to cancel your coverage when you get sick. “Can you give us an understanding of what factors,” asked Baritomo, “go into denying coverage for a customer?” Rather than answering the question, Braly quickly dodged and started praising her own company for the percent of each premium dollar spent on healthcare (known as the medical loss ratio). But after listening to Braly compliment her company for spending 87 cents per a premium dollar for health “delivery,” CNBC host Haines called her out for essentially lying with “clever” language:
HAINES: I believe you just said very cleverly worded 87 cents of every premium dollar goes to the delivery of healthcare. But in fact why don’t we look at your, the amount of payments you make per dollar you take in. It’s more like 80 cents, is it not? You pay 80 cents in benefits for every dollar. [...]
BARTIROMO: According to your 10k, the number is more like 80 or 81 cents.
BRALY: Yeah I’m citing a Pricewaterhouse Coopers study for the industry overall. 87 cents on the dollar is going to healthcare costs, in the industry–
HAINES: Well there you go again, that’s too cleverly worded. Going to healthcare costs? [...]
BRALY: Relative to other margins in the healthcare industry — biotech’s at 18, pharma’s at 16 — you know really we’re a low cost, low margin provider in the healthcare equation.
Haines was correct in calling out Braly’s deceptive language: WellPoint certainly does not spend 87 cents of every premium dollar on actual healthcare. In their 2nd quarter disclosures, WellPoint reportedly spent only 82.9% of every premium dollar on benefits, the remainder went to administrative costs, executive compensation (Braly herself makes approximately $10 million a year) and profits. The amount of every premium dollar spent on healthcare for WellPoint has actually been decreasing, while WellPoint has signaled they plan to be “hiking” premiums to at least “6% to 8% annually.” Although Braly likes to pretend that private insurers currently are a “low margin provider,” the truth is traditional Medicare’s administrative costs are only about 2%.
It is also no wonder Braly would want to dodge the question about rescissions. Earlier this summer, an executive from WellPoint testifying under oath specifically refused to “commit” to ending this practice, despite lofty claims to the contrary by insurance industry public relations professionals.
Indeed, WellPoint is refusing to end this immoral practice because rescissions are built into its business model. WellPoint reportedly provides monetary rewards for employees who successfully rescind the coverage of its customers and lists about 1,400 conditions as reasons for rescinding care. Three insurers alone (WellPoint, UnitedHealth and Assurant) canceled more than 20,000 policies in the last five years, saving the companies $300 million.