Wellpoint sues Maine for 3% guaranteed profit.

[SirNitram]

Link

AUGUSTA, Maine — Anthem Blue Cross and Blue Shield of Maine has appealed a decision by the Maine superintendent of insurance to hold down average monthly premium increases for individual policyholders this year from the 18.5 percent requested by the company last spring to 10.9 percent.

The Maine Bureau of Insurance announced the ruling in May after a series of statewide public hearings. Anthem protested the state’s decision in a court document filed in late August in Kennebec County Superior Court. On Sept. 23, the state Office of the Attorney General answered Anthem’s appeal.

The appeal focuses on the decision by Insurance Superintendent Mila Kofman to allow the company no built-in profit margin for the current fiscal year, which began in July. Anthem, a subsidiary of Indiana-based insurance giant WellPoint, had requested an 18.5 percent rate increase that would support a 3 percent profit this year for policies sold to individual Mainers who are not covered under employer-sponsored group policies. Kofman’s decision reduced the average increase to 10.9 percent.

In its defense of Kofman’s decision, the Attorney General’s Office cited Anthem’s “extremely sound financial condition” and its long history of profitability across all product lines as supportable reasons to curtail profits in the current year. Profits across all product lines, including large group, small group and individual poli-cies, were 7.5 percent in 2008, 9.4 percent in 2007, 5.7 percent in 2006, 5.4 percent in 2005 and 6.7 percent in 2004, according to the Attorney General’s Office defense.

In addition, the office’s response noted that in the three-year period from 2006 to 2008, Anthem’s Maine operation paid nearly $152 million in dividends to WellPoint. And in 2006, executive compensation for the nine highest-paid administrators in Maine totaled more than $4.3 million, averaging almost $500,000 per executive.

Assistant Attorney General Tom Sturtevant said Monday that Kaufman’s ruling did not rule out the possibility of Anthem realizing a profit, but simply didn’t allow the profit to be built into the company’s rate structure for this year.

“If they reduce administrative expenses” or save money in other ways, he said, Anthem still could realize a profit. Should the court rule in Anthem’s favor, he added, Mainers covered by individual policies likely would see their premiums increase this year.

Health care organizer Ali Vander Zanden of the Maine People’s Alliance said Monday that Kofman’s decision bodes well for Maine consumers.

“It is a very strong decision,” she said, “but it could have gone even further. Even a 10.9 percent increase is too high given the general economic situation.”

A spokesman for Anthem did not return calls Monday afternoon. The company is expected to respond to the Attorney General’s Office’s statement later this week, and a court ruling on the appeal is expected in November.

A public protest of Anthem’s appeal by the Maine People’s Alliance and other groups is scheduled for noon Wednesday on the steps of the Kennebec County Courthouse in Augusta.

Cannot wait to see the argument filed for why they need a 3% profit.

[Feil]

From the people of Maine (or at least this person of Maine) I say to Anthem: "Fuck you."

It's nice to see part of the government willing to oppose the trusts, for once, in stead of being in their pocket.

[SCRawl]

I don't have a problem with a company wanting to show a profit. After all, they really have to in order to continue existing. I *do* have a problem with the idea that there has to be a "built-in" profit guarantee, since it allows a company with such a guarantee in hand to spend like drunken sailors and still make money.

[aerius]

They want guaranteed profits? I got a plan for guaranteed profits.
It's called "let's nationalize the motherfuckers".

[General Zod]

They want guaranteed profits? That sounds a lot like socialism.

[Mr Bean]

So lets get this strait, we have here a company paying it's top executives multiple millions a year in salaries that does not need to compete against anyone and still makes excellent money doing so. And when the state stopped them from jacking up rates "because we like profits" they turn around and sued? Rather than trying to get more customers or decrease overhead(Which per the Internets is 15% don't know how true that is)

Yeah... Maine lets pass single payer, fuck em.

[aerius]

They want guaranteed profits? That sounds a lot like socialism.

It's not socialism because money isn't being given to poor people.
Everyone knows that rich corporations getting free money is 100% pure capitalism.

[Surlethe]

Think of the shareholders! Won't someone think of the shareholders?

[Haruko]

Cannot wait to see the argument filed for why they need a 3% profit.

So they can feed their families.

What? An NFL player made that argument.

[Simon_Jester]

Think of the shareholders! Won't someone think of the shareholders?

The shareholders fall under the heading of "and the horse they rode in on," which is also fucked.

[Solauren]

In response, the government should order an immediate audit of them, with all information to be made public.

Watch them back down on that.

After all, they need to think of the Shareholders.

[WesFox13]

Heheh, you know I really think that many of the people who cry out "Redistribution of Wealth (from Rich to poor) iz SOCIALISM!!!!111" when talking about government healthcare don't seem to realize the irony that redistribution of wealth is happening only from the poor to the rich.

And a 3% guaranteed profit, don't these rich fat-cats have enough money as it is?

[Master of Ossus]

Cannot wait to see the argument filed for why they need a 3% profit.

So they can feed their families.

What? An NFL player made that argument.

An NBA player made that argument.

I think you guys are unfairly characterizing the insurance company's argument and then using that to drive your conclusion. The point of their argument isn't that they should be guaranteed a profit in the sense that they're claiming that the state should guarantee all companies a profit. The point is that the government is setting prices, and if the government is setting prices then it's reasonable for them to require a normal rate of return on their capital to be included within that price. In effect, the State of Maine is treating the insurance company as a public utility, and those have been historically allowed to earn a normal rate of return such that they are (at least theoretically) indifferent between investing in the utility and another company. (This also eliminates the "gold-plated bridge" argument--they have no incentive to raise costs because they're just getting a normal return, anyway). A 3% profit is actually pretty low, since even long-term treasury bonds are offering those percentages now. Frankly, I'm pretty sympathetic to that: to the extent that a government body steps in and sets prices for an otherwise private, for-profit entity, they need to give equity-owners a reason to invest in that entity.

Edit: Incidentally, they're not really being "guaranteed" a profit, either, since what's going on is the state is setting their prices. It's like someone saying to gas stations that they must charge $3.00/gallon. That's profitable if they station can buy gas for $2.50, but not if they have to pay $3.25. The argument is merely that, when setting the price, the state should allow them to make a profit if they do their job reasonably efficiently, and so not only should the state make sure that their prices are high enough to allow them to pay their costs, but also high enough so that there's something left on top of that to show to shareholders.

[Keevan_Colton]

Which is of course an argument to shitcan the insurance companies in the first place...

[Uraniun235]

Think of the shareholders! Won't someone think of the shareholders?

We're going to need a lot more bullets, this could get expensive.

[Master of Ossus]

Which is of course an argument to shitcan the insurance companies in the first place...

Right, because making something a utility company is the same as "shitcanning" it.

[Keevan_Colton]

Which is of course an argument to shitcan the insurance companies in the first place...

Right, because making something a utility company is the same as "shitcanning" it.

In the case of the wasteful world of for-profit entities in a captive market with no real profit available short of fucking people and leaving them to die...yes, it pretty much is the same thing.

Lets not forget profit is just another word for waste.

[Count Chocula]

Which is of course an argument to shitcan the insurance companies in the first place...

And replace them with...what? Pay as you go? A la carte? In case you hadn't noticed, Medicaid is also an "insurance company" that is Fed-controlled and oh by the way Medicare will be bankrupt in 10 years.

Our current health insurance plans are controlled by the various states' [edit]insurance boards [edit] and subject to both insurance lobbying and political pressures. They are so highly regulated and restrictive as to the number of participants in a given state's plan that it's debatable whether they are really operating as shareholder-owned corporations or, as Master of Ossus observed, as public utilities.

As for auditing, go ahead. I see no conflict of policyholders' interest there.

[Count Chocula]

Lets(sic) not forget profit is just another word for waste.

Wow that's a good one, where did you hear it? More to the point, would you care to explain it? Now you're just talking out of your ass.

[Master of Ossus]

In the case of the wasteful world of for-profit entities in a captive market with no real profit available short of fucking people and leaving them to die...yes, it pretty much is the same thing.

Lets not forget profit is just another word for waste.

Let's not forget? Where the fuck did you learn that in the first place?

[Keevan_Colton]

Lets(sic) not forget profit is just another word for waste.

Wow that's a good one, where did you hear it? More to the point, would you care to explain it? Now you're just talking out of your ass.

Sure thing fuckwit.

Profit is the extra after accounting for all costs, which is then removed from the system in question: Dividends to shareholders and bonuses to executives and so on.

Waste is that which is removed from a system, or is surplus to requirement and not put to use in the system.

The difference being of course that waste is a generalized term with normally negative connotations, and profit is a more specialised one with generally positive ones. In fact it's accepted as an end in and of itself.

[Count Chocula]

Ghetto Edit: meant to say "Medicare" not "Medicaid" in my first post. Medicaid won't be bankrupt until 2020.

[Axis Kast]

Profit is the extra after accounting for all costs, which is then removed from the system in question: Dividends to shareholders and bonuses to executives and so on.

Profit also permits reinvestment, which in time means expansion, or upgrade, of services.

[Master of Ossus]

Sure thing fuckwit.

Profit is the extra after accounting for all costs, which is then removed from the system in question: Dividends to shareholders and bonuses to executives and so on.

Bullshit. The vast majority of earnings are retained in our economy (and, indeed, all developed ones), with only small amounts returned as dividends to shareholders or executive bonuses. Moreover, most people view mobility of capital as a good thing that reduces (properly defined) waste.

Waste is that which is removed from a system, or is surplus to requirement and not put to use in the system.

Waste the noun is something that is useless or unwanted; profit serves many, many functions in the economy, not the least of which the informative function it plays for other producers, investors, consumers, suppliers, the government, etc.

The difference being of course that waste is a generalized term with normally negative connotations, and profit is a more specialised one with generally positive ones. In fact it's accepted as an end in and of itself.

In a for-profit business profit is accepted as an end in and of itself (hence: for-profit). In no entity is "waste" an accepted end in and of itself; in fact, most entities discourage it.

[Ritterin Sophia]

Think of the shareholders! Won't someone think of the shareholders?

We're going to need a lot more bullets, this could get expensive.

This is the reason we're using guillotines. I mean have you seen how expensive ammo is these days?