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home / healthcare / press releases

Apr 18, 2005

CONTACT: Jerry Flanagan, (310) 392-0522 ext. 319

Governor and Insurance Commission Called on To Investigate Double-Digit Premium Increases in Wake of $4 Billion WellPoint/Anthem Merger

Consumer advocates called on Governor Schwarzenegger and Insurance Commissioner Garamendi to investigate double-digit rate increases being imposed on Blue Cross customers in a letter sent today. State officials must ensure that Blue Cross and its parent company, WellPoint, are honoring their commitment to not charge Californians for costs resulting from its recent merger with Anthem, the Foundation for Taxpayer and Consumer Rights said.

The nonpartisan nonprofit FTCR cited legally binding commitments made to the state, prior to giving regulatory clearance to the merger, that an estimated $265 million in executive bonuses and $4 billion in financing charges would not be passed on to patients and business owners. The merger created America's largest health insurance company. FTCR noted that two WellPoint executives also received salary increases this year of 15-20%.

In the letter, which included profiles of Blue Cross patients who have received rate increases of over 20% as well as benefit reductions this year, FTCR wrote:

"You must now investigate these rate increases and force the company to refund any overcharges resulting from the $4 billion in financing costs, executive bonuses and other costs associated with the merger. The legally binding agreements you signed with company executives give you the authority to act. Your duty to protect California patients demands it."

In recent months, patients and business owners around the state have contacted FTCR frustrated by massive rate increases to their Blue Cross policies. The group is conducting health care town halls throughout the state with patients, business owners, doctors, nurses and hospital executives. The goal of these convenings is to find solutions for affordable health available to all Californians. A consensus theme from these events is the need to rid the health care system of waste and inefficiency. The California Medical Association, California Nurses Association and business owners opposed the excessive executive pay-outs associated with the merger.

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