Angela Braly lost the hang of the CEO’s performance art. Shareholders like their surprises on the upside. She kept delivering downside surprises. Two weeks ago, amid a clamor from investors, she stepped down as chief of America’s biggest private health insurer, WellPoint.
But Mrs. Braly should be remembered for another long-running act of futility—trying to explain to Washington how insurance works.
If people can wait till they’re sick, Mrs. Braly took the trouble to explain, the insurance business can’t exist. If the cost of health care is not passed along to customers, the industry will be bankrupt. WellPoint charged young women slightly more than young men because they see the doctor more often. It canceled the coverage of four breast-cancer victims (out of 200,000) because they purchased their policies after they were sick.
That an insurance company behaved like an insurance company left Washington incredulous.
“There was a wall. I couldn’t pierce the wall,” complained Sen. Dianne Feinstein after one hearing with Mrs. Braly.
“How much money do you make?” was the penetrating demand of Rep. Jan Schakowsky, who groused afterward, “It was like she was completely oblivious to the public reaction.”
WellPoint’s pièce de résistance was an act so insurance-like that many now credit it with single-handedly resurrecting the dying ObamaCare legislation. In early 2010, the company sent notices to individual policyholders in California saying it intended to raise rates by an average of 25%. Thanks to the bad economy, healthy people were dropping coverage, leaving only sick people in the insurance pool to pay for their own rising medical costs. Without rate hikes, WellPoint explained, the company would pay more in medical costs than it was receiving in premiums.
Political firestorms are often a product of non-spontaneous combustion. This was one such case. In an interview on CBS before the Super Bowl, Mr. Obama denounced the WellPoint rate hikes. A few weeks later, in his Saturday radio address, he revived charges that the company “systematically” dropped coverage of breast cancer patients.
The White House press office tweeted furiously all things WellPoint; the administration’s allies mercilessly flogged its talking points to the masochists who watch cable TV. To the delight of some in the insurance business and horror of others, Mrs. Braly fought back, scolding the president in a public letter.
In the middle of the furor, the Senate passed ObamaCare. Whether Mrs. Braly really is responsible is doubtful. But the melodrama had an epilogue.
Under Mrs. Braly, WellPoint had proved more than once it wasn’t good at math, badly underestimating medical costs and mispricing its policies in late 2007. Now an independent reviewer found math errors in its 25% rate-hike submissions (15% was deemed more reasonable). By then, WellPoint had already agreed to trim back the hikes even further, choosing deliberately to lose $100 million on its California business (an unrecorded, in-kind contribution to Democratic coffers if the campaign laws were honest).
That an insurance company should lose the ability to make actuarial calculations on Mrs. Braly’s watch is not entirely unfitting. For the very idea that health insurance is “insurance” may also finally have succumbed on her watch.
No better example is the panegyric that greeted Sandra Fluke, the 31-year-old Georgetown grad student and Joan of Arc of “free” contraception, at the Democratic convention. Forget the social-issue politics of it. Does it not grab a single Democrat’s attention that requiring insurance to pay for small, routine, predictable costs like contraception is one reason insurance costs are running out of control?
The Democratic convention often seemed a parade of people who wanted X, wanted someone else to pay for it, and were remarkably self-righteous about it. To state the obvious: There is nobody but us to pay for our health insurance, either through our taxes or our premiums. Ms. Fluke’s contraception can only end up costing more when channeled through an insurance bureaucracy than if she bought it herself at a competitive price at the local Rite Aid.
Mrs. Braly was no Quixote. She complained only that the individual mandate in ObamaCare was too weak, and the law didn’t tackle rising costs. She executed a series of deals to focus WellPoint more on Medicare and Medicaid and less on the shrinking private insurance market. Her company would become a government contractor. For better or worse, its next CEO (as yet unnamed) will spend less time explaining insurance to Washington and more time wheedling for bigger and bigger appropriations.
Why ObamaCare even keeps insurers, which are reduced to administrators and payment conduits, is a technical mystery, though perhaps not a political one. Mrs. Braly may be gone, but insurance CEOs will be more in demand than ever on Capitol Hill as flogging victims when costs under ObamaCare keep rising and rising.