Health Insurer Sues Maine for Guaranteed Profits

by ADAM THOMPSON
A story from Maine offers up another reason why we need the choice of a public health insurance option, and it's a doozy. Anthem Blue Cross and Blue Shield of Maine, a subsidiary of the insurance giant Wellpoint, is suing the State of Maine because the insurance commissioner refused to approve its request for a rate increase of 18.5% for its individual products, which included a guaranteed 3% profit. Commissioner Mila Koffman found Anthem's request "excessive" and approved a 10.9% average increase in premiums.

Anthem, of course, is not being denied a profit. As a lawyer in the Attorney General's office pointed out, the company can still earn a profit in its individual line by trimming its corpulent waistline, "if they reduce administrative expenses". As a hint for how they could do this, the nine highest-paid Anthem administrators in Maine made more than $4.3 million in 2006. The Attorney General, which is representing the Commissioner, noted that Anthem averaged a 3.2% annual profit in its individual line in the nine years since it bought the non-profit Blue Cross and Blue Shield of Maine and that going a year without a guaranteed profit would not drain the company.

Indeed, despite the economic downturn and the financial strains being placed on families and small businesses, it's as if health insurers like Anthem never have a down year. Since purchasing the non-profit Blue Cross and Blue Shield, Anthem has raised individual premium rates 8 out of 10 years, and often in double digits. Across all its business lines (individual, small and large group), Anthem's profits ranged from a low of 5.4% to a high of 9.4% from 2004 through 2008. For its part, Wellpoint is doing very well by its subsidiary. From 2006 to 2008, Anthem has paid its parent company $152 million in dividends.