Why Angela Braly, CEO of WellPoint Insurance, May Not Deserve a Raise After All
Filed under: Obama Administration, Private Insurance
Photo by iampeas via Flickr
Earlier this year we discussed why Angela Braly, the CEO of WellPoint Insurance, deserved a raise. WellPoint, by number insured, is the nation’s largest health insurer. Ms. Braly had been forced to make ends meet in 2008 with total compensation which amounted to $189,311.76 per week. This of course is less than half of what Aetna’s CEO, Ronald A. Williams, made that same year ($467,309.85 per week). For those of you keeping score at home, Ms. Braly commanded $9,844,212 in 2008. Mr. Williams made $24,300,112.
Considering this disparity, we wrote
So why does Angela Braly deserve a raise? …. Because WellPoint subsidiary Anthem Blue Cross of California has found the audacity to raise individual insurance premiums in that state 39%. That’s right, 39%. This, according to Secretary of Health and Human Services Kathleen Sebelius, “as WellPoint Incorporated has seen its profits soar, earning $2.7 billion in the last quarter of 2009 alone.”
Profits “soar,” raise rates. What more could Wall Street want?
The answer to that question, apparently, is both math skills and a public relations strategy.
In April, Wellpoint was forced to withdraw its California rate hike of 39% because of math errors in the submission. Yes, math errors.
According to the Wall Street Journal, “WellPoint’s stock fell almost 10% on April 30, the day after the company disclosed mathematical errors in its California rate filing, and it hasn’t rebounded.”
As such, Ms. Braly is said to have faced staunch criticism as of late at WellPoint’s annual shareholder’s meeting and at meetings with the company’s managers and top brokers prior. The shareholder’s meeting, described as “testy” by the Associated Press, was cut short when William H.T. Bush, the brother of former President George H. W. Bush, and a member of WellPoint’s board of directors, collapsed. Although no one is said to have collapsed at her other meetings, no one has described them as cordial either.
Wellpoint faced criticism from the Obama administration in light of its noteworthy proposed rate hikes in California, including, but not limited to, the scathing letter quoted above from Secretary of Health and Human Services Kathleen Sebelius. The level of acrimony recently escalated when, according to the Wall St. Journal
A week ago, President Obama said his administration had recently asked an insurer to stop systematically dropping coverage of women with breast cancer. The president didn’t name the insurer, but WellPoint has been fending off accusations that it targets such women.
Ms. Braly denied the allegations and shot back at Mr. Obama for spreading “false information.” Health and Human Services Secretary Kathleen Sebelius has called on states to investigate WellPoint’s pricing practices. And last Thursday, the Senate Finance Committee asked Ms. Braly for a detailed account of how the errors occurred.
Perhaps the lady doth protest too much?
Either way, Ms. Braly is said to have later offered that: “The goal is to have a positive relationship with the government at all times.”
It is good to have goals.
The Wall Street Journal notes that
Jay Nogueira, vice president at one of the company’s top 10 shareholders, T. Rowe Price, said the stock won’t bounce back until investors were convinced that there isn’t another chapter in the hostility with the government. “These guys are not dealing well with the public limelight,” said Mr. Noguiera.
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Insurance company brochures paint happy pictures of people who are “protected” by their insurance. The truth is, that while insurance companies do pay out billions for claims, many people slip through the cracks. Sometimes it is their fault - they waited until they were sick before getting insurance and thus fell into the pre-existing category. However, as this article points out, the executives of many companies, not just insurance companies, get huge amounts of pay. They have grown to expect this, just like top athletes and actors expect high pay. I’m not defending the practice, just stating what is. Insurance companies are not in the business to protect you, but to protect their own bottom line. They know about risks far more than you, thus, policies are geared so the insurance companies pay as little as possible You take the initial responsibility for your health care through deductibles and copays. Thus, for the consumer, it becomes a math problem to solve - how to pay the least amount of premium for the right amount of coverage.