WellPoint/Anthem Shareholders Revolt!Rob Stone M.D. - The Huffington Post April 13, 2010
Wasichu is the Lakota (Sioux) word for "those who take the fat," the greedy ones. WellPoint/Anthem, the health insurance behemoth born of Blue Cross, is a wasichu corporation.
As the Blue Cross movement grew in the 1930's, one of the foundational standards established in 1937 was "No private investors should provide money as stockholders or owners." There was no concept of pre-existing condition. Excluding someone from health insurance because they might be likely to become ill (and need to actually use the policy) was felt to be immoral. Their mission was essentially charitable.
Over the following fifty years the Blues grew dominant, but in late 80's the marketplace began to change, and many state Blue plans found themselves in trouble. Blue Cross of California established a for-profit subsidiary in 1994 and that summer the national Blue Cross Blue Shield Association changed its policies so that its licensees could convert to for-profit status and distribute their earnings to those who controlled the company. Enter WellPoint, under the guidance of Leonard Schaeffer.
A similar story played out in Indiana where the local Blue Cross began by merging with surrounding state plans and then "de-mutualized" to become a publicly traded company. Their initial stock offering in late 2001 raised $1.7 billion, which only fed the acquisition and for-profit conversion rampage, culminating with the mother of all insurance mergers when WellPoint of California and Anthem of Indiana came together in 2004 to create the largest health insurance company in the country, with 34 million lives covered. Today one American in ten carries their card, and WellPoint is number 32 on the Fortune 500.
Corporate headquarters moved to Indianapolis, under Anthem's Larry Glasscock, whose bonus was $42.5 million for closing the deal. WellPoint's Leonard Schaeffer retired with a package valued at $337 million. Wasichu.
In 2005 my wife Karen and I bought five shares of WellPoint stock so we could make the hour's drive up to Indianapolis for the company's annual meeting and "speak truth to power." Last year I warned the WellPoint board that I would be coming back in 2010 with a shareholder resolution to change the direction of the company back toward its Blue Cross, charitable, non-profit roots.
We beat the odds and were successful in placing our resolution on the proxy ballot. The proxy was sent to all shareholders last week, to be voted on at the annual meeting May 18.
People ask me, why should WellPoint shareholders vote for a proposal to radically change the course of the company?
The reasons are being published everyday. Going back just 12 weeks:
The Indianapolis Star on January 16 revealed WellPoint to be covertly funding U.S. Chamber of Commerce attack ads against health care reform. WellPoint spent tens of millions on other non-covert lobbying. Keep in mind that the bill recently passed was largely written by former WellPoint Vice President Liz Fowler in her role as Max Baucus' chief health care legislative aide.
McClatchy Newspapers on February 24: "While Anthem Blue Cross proposed a 39 percent rate increase on thousands of its California customers, its parent company gave 39 of its executives more than $1 million each and spent more than $27 million on 103 lavish executive retreats, congressional investigators said."
The Los Angeles Times on March 10 updated its readers on the rescission scandal involving WellPoint in California. "Only a small fraction of eligible Californians have benefited from agreements that Anthem Blue Cross made to settle accusations that they systematically and illegally dropped sick policyholders to avoid paying for their care." These were people whose insurance coverage was canceled after they were diagnosed with cancer and other serious conditions.
Consumer Watchdog reported March 31 that WellPoint sent a message to investors describing how it would simply re-label administrative costs as "medical care" in response to the new health reform law. The message follows revelations that WellPoint, also intentionally padded already huge premium increases in California, in case regulators demanded reductions.
I could cite hundreds more, and now the news of CEO Angela Braly's 51% compensation increase, up to $13.1 million. Their arrogance is overwhelming. Why wouldn't shareholders be concerned about where the company is heading? It's not like WellPoint even pays any dividends, while it has plenty to spend on its executives and lobbying.
Last Tuesday I heard Allan Hubbard speak on health care reform at Indiana University. Mr. Hubbard, an Indianapolis businessman, served in the GW Bush administration and is a former Director on WellPoint's Board.
He made no bones about being a Republican and shared a Republican view on where health care reform should go from here. At the end of his talk he concluded with this prediction, "My guess is that in 15 years we will have a single payer health plan, Medicare for All." He wasn't saying this gleefully.
He explained that all health insurance companies do is serve as middlemen between patients on one hand and doctors and hospitals on the other. He fears that as health care reform moves forward, Congress and the people will turn on them as a way to cut spending.
They (we) should.
The health insurance industry adds huge administrative costs to our system, not to mention the profits they siphon off. WellPoint is a parasitic middleman that adds no value, but actually increases the cost of health care for all of us.
I see the day when socially responsible investors will divest themselves from health insurers' stocks.
My recommendation is that WellPoint investors support a drastic change in direction for the company, and not wait for the stock price to plummet, for the health insurance bubble to burst.
Check your pension plan and mutual funds. If you own any WellPoint (WLP) stock, vote for Proposal No. 3, shareholder proposal concerning a feasibility study for converting to nonprofit status. TIAA-CREF is the 12th largest holder of WellPoint stock. If you're invested with them, tell them what you think. If you have any affiliation with a university, ask them about their endowment holdings. Does your faith tradition have a policy for socially responsible investing?
Polls in 2008 and 2009 consistently showed over 60% of the public favoring a single payer plan. The public option polled over 70% approval well into the Fall. Have those people gone away? No, but they (we) are disappointed, discouraged, and weary. They (we) look back and say, "I wrote letters, made calls, went to rallies, and some of us were even arrested. And what did we get? Tens of millions of Americans forced to buy private insurance with our tax dollars subsidizing the premiums, a huge transfer of wealth from taxpayers to shareholders."
People ask me what I think about the new health care bill. My reply: "Health care reform: We're STILL FOR IT... and we're not done yet."