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WellPoint, Obama rift escalates

A war of words between President Obama and health insurers escalated Sunday as industry giant WellPoint Inc. found itself under renewed attack for raising rates and canceling insurance policies of sick patients.

President Obama raised the issues as part of his weekly radio address, saying, “For too long, we have been held hostage to an insurance industry that jacks up premiums and drops coverage as they please. But those days are finally coming to an end.”

WellPoint Chief Executive Angela Braly fired back. In a letter Sunday addressed directly to Obama, she noted that policy changes were underway nationwide, and she called on him to stop his attacks on the industry.

It will take cooperation between the industry and government to implement the new healthcare reform law, she said.

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“If we are going to make this law work on behalf of all Americans the attacks on the health insurance industry — an industry that provides valued coverage for more than 200 million Americans — must end.”

These should be heady days for health insurance giant WellPoint Inc. and Braly. The nation’s largest health insurer has more customers than any competitor. It earned nearly $900 million in the first three months of the year. And tens of millions of Americans will soon buy insurance under the new federal healthcare law, many of them potential customers.

Even so, the parent of California’s huge Anthem Blue Cross is finding itself under fire from regulators, politicians and the public — attacks that could hurt its business and financial prospects.

In addition to continuing criticism from the Obama administration, many of the insurer’s California customers remain irate despite its canceling of a planned rate hike this year, and Democratic lawmakers and regulators, on the warpath much of the year, are raising new issues.

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California Democratic Sen. Dianne Feinstein, for one, is pressing for new congressional hearings to examine the flaws uncovered in the California rate filing. One of WellPoint’s most vocal critics in Washington, Feinstein said she met with Braly not too long ago in her Senate office to discuss the company’s planned rate hikes in California.

“It’s like we talked past each other,” Feinstein recalled. “There was a wall. I couldn’t pierce the wall.”

Braly, who faces more controversy over rates in the coming weeks along with a new round of congressional inquiry, is rushing to douse the spreading fires. Sunday’s letter to the president was her latest effort to respond to the criticism.

In the letter, she took issue with what she saw as Obama’s assertion in his radio remarks that WellPoint had canceled insurance for women with breast cancer, saying she was “disappointed to hear you repeat false information … in your weekly presidential radio address.”

Obama said in the Saturday radio address that an insurer was “systematically dropping the coverage of women diagnosed with breast cancer.” Although Obama did not cite WellPoint by name, the insurer said that it was the subject of the reference.

Braly told Obama that his statement “grossly misrepresents WellPoint’s efforts to help prevent, detect and treat breast cancer among our 34 million members.” She said the company’s cancellation of policies were based solely on “fraud or misrepresentation.”

Braly said that WellPoint spent nearly $2 billion in 2009 covering treatment for about 200,000 women with breast cancer and that just four policies were canceled because of fraud or misrepresentation.

Last week, Braly turned her attention to the company’s 40,000 employees. In a memo, she outlined a strategy to “ensure greater accuracy” in the aftermath of mistakes that led Woodland Hills-based Anthem to cancel its planned rate hikes of as much as 39% for thousands of individual policyholders in California.

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WellPoint, she said, will have outside experts review all of its 2010 rate filings in the 14 states where it does business. In California, the company will ask the state insurance consultant that uncovered the problems in its filing — Axene Health Partners — for guidance as it resubmits rates this month.

WellPoint executives, meanwhile, will redouble efforts to cultivate their relationships with state regulators in the aftermath of the Obama administration urging states to scrutinize the company’s rate filings for flaws like those found in California, she said. “Our goal is to make healthcare reform and healthcare benefits work for every one of our members.”

So far, Wall Street appears to approve of Braly’s leadership, noting that WellPoint’s performance this year is roughly in line with other publicly traded insurers.

“From an investor point of view, she is doing as good a job as could be expected given the pressures,” Steve Shubitz, a healthcare analyst with Edward Jones in St. Louis, said last week. “WellPoint and the whole insurance industry have become targets.”

duke.helfand@latimes.com


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