Shake-up at Anthem Blue Cross as its president steps down

The president of Anthem Blue Cross announced her resignation Tuesday amid stinging criticism of double-digit rate increases that infuriated consumers, lawmakers and government regulators.

Leslie Margolin, 55, steered Anthem at a time when its parent company, WellPoint Inc., and the entire insurance industry came under attack by members of Congress and the Obama administration over rates viewed as excessive and policies that denied coverage.

During her 2 1/2-year tenure at the helm of California’s largest for-profit insurer, Margolin tried to cast Anthem as a responsible corporate leader that cared for customers and sought to contain costs by forging collaborative relationships with hospitals, doctors and other medical providers.

But shaping Anthem’s image grew increasingly difficult this year, as the Woodland Hills insurer faced intense public scrutiny over its planned rate increases of up to 39% for many of its nearly 800,000 individual policyholders in California. Anthem’s rates became a national symbol of insurer excesses, and the company canceled the hikes in April after miscalculations were uncovered in its filing.

Margolin herself was the target of much of the immediate public backlash. U.S. Health and Human Services Secretary Kathleen Sebelius wrote her in February, demanding that she justify the rate hikes. Weeks later, Margolin was called to testify in Sacramento and faced hostile questions by members of the Assembly, one of whom asked her, “Have you no shame?”

Margolin was testifying about rate increases she said were dictated by WellPoint but that preoccupied much of her last six months on the job.

Both Margolin and Anthem insisted Tuesday that her departure had nothing to do with the rate controversy. Margolin called her resignation a “mutual decision,” adding that she had been talking to WellPoint about leaving for several months. She will lead a private initiative to streamline the delivery of healthcare in California.

“I loved my time at Anthem,” she said in an interview. “I had a great job and a terrific team, but I’m very excited about the new work.”

WellPoint released a brief statement on Margolin’s departure, saying she “played an integral role in collaborating with hospitals and providers across the state” and championed innovations to improve patient safety and healthcare quality.

“Anthem would like to thank Leslie for her leadership and commitment to the company over the past two years,” WellPoint said.

Company officials declined to comment further.

An attorney by training, Margolin served as president of Cigna HealthCare of California and national chief operations officer at Kaiser Permanente before being named Anthem president in January 2008. Early in her Anthem tenure, she spoke about the challenge of rebuilding the company’s image and morale after public criticism of its practice of canceling policies of sick policyholders.

Margolin said she had no hand in developing the controversial premiums that triggered so much public furor but instead was responsible for overseeing insurance for small and large businesses in California. Rates in the individual market, she said, were developed by WellPoint. “It was done completely outside my purview,” she said.

Margolin will be succeeded for now by Anthem Vice President Mark Morgan, who has led the development of sales and distribution strategies for the insurer’s small group business since 2008.

Margolin said she will lead a private coalition that aims to improve California’s healthcare delivery system. The group, Transforming Health Care, will comprise hospitals, physician groups, health plans, employers and consumer advocates, she said.

One of its members, attorney and Anthem policyholder Laurel Kaufer of Woodland Hills, said she was impressed by Margolin’s willingness to listen. Kaufer testified at the Assembly hearing in February about Anthem’s plan to raise her rates 34%, but later spoke with Margolin in person.

“She has shown a great deal of integrity,” said Kaufer, who remains critical of Anthem. “She might be able to accomplish a whole lot more from the outside to make healthcare better in California.”