By J.K. Wall
Indianapolis Business Journal, April 6, 2010

Saying WellPoint Inc. has failed to live up to its commitment to provide “the best healthcare value” for customers, three shareholders of the Indianapolis-based health insurance giant want it to convert to a not-for-profit organization.

They have proposed that the company study the feasibility of such a conversion. The proposal will be voted on at WellPoint’s annual meeting of shareholders in Indianapolis on May 18.

The proposal was disclosed Friday in WellPoint’s proxy statement. The three shareholders—Rob and Karen Stone of Bloomington and Julia Vaughn of Indianapolis—will stage a press conference about the proposal Wednesday morning in front of WellPoint’s Monument Circle headquarters.

“WellPoint has had a heap of (well-deserved) bad publicity lately about their corporate culture of greed,” Rob Stone, an emergency physician at Bloomington Hospital, wrote in an e-mail. He referred to recent controversy over WellPoint’s premium hikes in California, Indiana and other states, and to Friday’s report that its executives enjoyed boosts in compensation last year ranging from 50 percent to 75 percent.

WellPoint’s board of directors urged shareholders to vote the proposal down.

“The proponent of this proposal has not presented any factual information to support the view that converting to nonprofit status would benefit us or our shareholders, employees, customers and members,” the board members wrote in a statement in WellPoint’s proxy filing. They said a feasibility study of the issue “would be costly and would distract management and the Board from overseeing our operations.”

Board members added that as a not-for-profit organization, the company would have poorer access to capital and, by not being able to pay executives with stock, would have a harder time attracting top-level managers.

WellPoint’s predecessor company, Anthem Inc., was a mutual insurance company until its initial public offering in 2001. It was, however, always a for-profit entity. Many of the companies acquired by Anthem or other WellPoint predecessors did convert from not-for-profit to for-profit status before being acquired.

The Stones and Vaughn would like to see the United States adopt a single-payer health insurance system, where the U.S. government would act as insurer for all Americans. Their proposal claims that WellPoint spends as much as 19 percent of its premium dollars on administration and profit, compared with about 3 percent spent on overhead by the federal Medicare insurance program for seniors.

“Although this is good for WellPoint’s profitability and share price, it supports the argument that for-profit health insurance is a major reason for the discrepancy in overhead expenses between the U.S. and other countries,” the shareholder proposal reads. “Nations with universal systems spend about half what we spend on a per-capita basis and have better health outcomes.”

During last year’s annual shareholder meeting, Rob Stone called informally for WellPoint’s board to re-mutualize the company.

[PNHP note: the statement below is the full text of Dr. Stone’s statement of April 7]

Press Conference Statement April 7, 2010

People ask me, why should WellPoint shareholders vote for the proposal that the company explore returning to its traditional Blue Cross, charitable, not-for-profit mission?

The reasons keep coming out in the newspapers, and let me mention a few from the last 12 weeks.

The Indianapolis Star on January 16 exposed that WellPoint has been 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 healthcare 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 ongoing 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 cancelled after they were diagnosed with cancer and other serious conditions.

The Los Angeles Times again, on March 18 reported that in 2007 WellPoint had pledged through its charitable foundation to spend $30 million over three years to help those lacking health coverage, but its tax records and website show it gave only $6.2 million.

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, just in case regulators demanded reductions.

Also on March 31, Revive Public Relations released the results of its fourth annual national payer survey of hospital executives. Survey results showed a marked decline in WellPoint/Anthem’s reputation, now 2^nd worst of all health insurance companies in their study.

And now this week the news of CEO Angela Braly’s 51% salary increase, up to $13.1 million.  The arrogance is overwhelming.  Why wouldn’t shareholders be concerned with the direction this company is heading?

Yesterday afternoon in Bloomington I listened to Allan Hubbard speak on health care reform at Indiana University.  Mr Hubbard, an Indianapolis businessman, served in the GW Bush administration and is a recent member of WellPoint’s Board of Directors.  

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 that gleefully.

He explained that all the health insurance companies do is serve as middlemen between patients and providers, (doctors and hospitals).  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 healthcare 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 look at drastically changing the
direction of our company, and not wait for the stock price to plummet once the public figures out that insurance companies should go.

Rob Stone MD
Director, Hoosiers for a Commonsense Health Plan (http://www.hchp.info/)
State Coordinator and national Board member, Physicians for a National Health Program
Assistant Clinical Professor of Emergency Medicine, Indiana University School of Medicine

BY CHRISTIN NANCE LAZERUS
Post-Tribune (Merrillville, Ind.), April 2, 2010

GARY — The health care reform bill was adopted last week with great fanfare, but some critics believe the legislation didn’t go far enough.

Indiana University Northwest hosted a lecture and discussion Thursday on why a single-payer system wasn’t seriously considered in the health care debate.

Minority Studies chairman Raoul Contreras said the health care debate illustrated the frustration that ordinary Americans have with government.

“You think you’re involved, but you’re not,” Contreras said. “The only thing that was considered was how do we reform the profit-driven insurance company system. The question I think we should be asking is, do we need these insurance companies?”

Dr. Erlo Roth, a pathologist in Hinsdale, Ill., spoke about what universal health care system would work best in the United States.

Roth became involved with Physicians for a National Health Program about a year ago.

“I’m worried about the way that the health care system has moved in the past 20 or 30 years, not in terms of quality but in the way it’s financed,” Roth said.

Roth said the United States spends about 17 percent of its Gross Domestic Product on health care compared to 8 percent in other developed nations. He said more spending doesn’t yield better health outcomes — the infant and maternal mortality rates in the U.S. lag behind other countries and many uninsured Americans have chronic medical conditions that go untreated.

Roth outlined some of the differences between universal health care systems in Germany, England and Canada.

In Germany, in-surers are private and nonprofit, and are mandated to offer a level of benefits. In England, hospitals are owned by the government and staff are employed by the National Health Service.

Canada’s National Insurance Model works similar to Medicare, with doctors and hospitals staying private.

All of these universal programs are paid for by progressive taxes.

Roth believes the best solution for American health care would be to offer a Medicare-for-all system.

“Doctors and hospitals would remain independent, and drug companies would have to negotiated fees with the government, like the Veterans Administration does,” Roth said.

He said the health care measure signed into law is an important first step toward expanding coverage, but it doesn’t control costs and still leaves about 23 million people without insurance.

Activist Nick Egnatz wondered why a single-payer health care system was never seriously considered by politicians in Washington, D.C. He attributed part of the reason to lobbyists.

“We need representatives that represent us,” he said. “Both political parties are supported by corporate interests.

“There’s something wrong with a system that doesn’t take care of everyone.”

http://www.post-trib.com/news/2136566,healthcare0402.article

By Linda Greene
Bloomington Alternative, April 4, 2010

When it comes to health care reform, single-payer advocate Rob Stone, M.D., says, “We’re still for it, and we’re not done yet.”

The need is undeniable. Over 46 million Americans are uninsured, and a recent study reported in the American Journal of Public Health showed that 45,000 die each year because they lack health insurance. Tens of millions are underinsured, able to afford coverage only with policies with gigantic deductibles and out-of-pocket expenses.

Of U.S. health care spending, 31 percent covers administrative costs, or overhead. Medicare, in comparison, spends only 3.1 percent on overhead. According to the Organization for Economic Cooperation and Development, countries with universal health care spend about 50 percent of what we spend per capita and have superior health outcomes.

***

Stone, an emergency physician at Bloomington Hospital, director of Hoosiers for a Commonsense Health Plan (HCHP) and board member of Physicians for a National Health Plan, is working on a two-pronged campaign for changing the health care status quo.

One is an “inside” approach, offering a resolution for the health insurance company WellPoint stockholders to vote on. The resolution calls for WellPoint to study the feasibility of returning to its nonprofit status.

Several shareholders, including Stone, have successfully placed the resolution on WellPoint’s proxy statement, released this week and to be voted on at WellPoint’s annual stockholders’ meeting on May 18 in Indianapolis.

The resolution also asserts that “no country has achieved universal health care through for-profit health insurance. … WellPoint was a nonprofit insurance company before it demutualized, raised capital through stock offerings, merged with, acquired, and demutualized other nonprofit Blue Cross/Blue Shield companies [in the early ’90s].”

With its for-profit status, WellPoint has changed its focus from patient care to profits for its stockholders.

Hoosier health care activists are targeting WellPoint because it’s the largest corporation in the health insurance industry and has headquarters in Indianapolis. Further, WellPoint is a leader in the industry in marketing high-deductible policies.

The resolution, which has been presented to the stockholders for a vote by proxy, needs to receive 3 percent of the votes for it to be considered for a second year. If it receives 10 percent of the votes the second year, it can be introduced third year.

The health insurance industry is vulnerable. Lately it’s received negative publicity about policy cost increases. In her recent testimony on those increases before Congress, WellPoint’s CEO, Angela Braly, whose salary is $9 million per year, left an unfavorable impression of the corporation. WellPoint’s reputation has suffered also as a result of the negative publicity surrounding its efforts to oppose health care reform.

***

Two, the “outside” approach, is divestment of stock from the for-profit health insurance industry as a whole. Investors can use divestment, the selling of stock and thus the opposite of investment, to protest particular corporate policies.

“Divestment,” according to Stone, “is an economic and political tool that puts political pressure on corporations to change their policies.”

The idea for divesting from the health insurance industry originated with Kurt Edelman, from the Service Employees International Union, during an activists’ conference call about the industry.

Divestment from the health care industry has, as its model, divestment from South Africa during its racist, apartheid regime. Then, divestment entailed persuading companies to cease doing business in South Africa in protest the regime.

Although health care activists’ goal is complete divestment of stock in the publicly traded health insurance industry, in Stone’s words, the industry is a “parasitic middleman that increases cost and complexity, with no value added.”

The starting point is WellPoint. Last year a WellPoint shareholders’ resolution calling on the company to divulge the pay given to executives almost passed, with 46 percent of the votes. It could pass this year, according to Stone.

One avenue Stone and his fellow activists are exploring is mutual funds that own stock in WellPoint. TIAA-CREF, in which many teachers and college professors have investments for their pensions, is the 12th largest stockholder in WellPoint and holds 5 million shares of WellPoint, worth about $320 billion.

Stone figures people in the teaching profession are more likely than some others to be sympathetic to a divestment campaign. The aim is to weaken the health insurance industry, and academics can put pressure on their employers to divest.

***

Single-payer advocates and proponents of a public option, as Stone says, are “let down, worn out and disappointed” in the current health care “reform.” But he adds immediately, “The antidote to despair is action.”

Stone said HCHP will release the resolution during a press conference at 11 a.m. on Wed., April 7, in front of WellPoint’s headquarters on Monument Circle in Indianapolis. The public is welcome to attend.

Attending a rally in front of WellPoint headquarters at 11 a.m. on Tuesday, May 18, after WellPoint’s annual stockholders meeting, is even more important, Stone said.

The point of the rally is to draw attention to WellPoint’s current negative public relations and to build a campaign to expose the problems with for-profit health insurance.

At the rally singer-songwriter Carrie Newcomer will perform, and the speakers will include Wendell Potter, a former vice president of communications for the health insurance company Cigna. He was in charge of running a campaign to discredit Michael Moore’s film Sicko, but he switched sides in the health care debate after observing hundreds of people without health care wait for care at a free clinic in Appalachia.

Linda Greene can be reached at lgreene@bloomington.in.us.

***

For more information
E-mail Rob Stone at rstone@hchp.info.

http://www.bloomingtonalternative.com/node/10358