The Obamahouse and media have seized on the WellPoint Blue Cross profits and are using the bully pulpit to drum up support for health insurance reform. ABC News provides some insight into the profit structure of WellPoint and for those who are paying attention, takes the hot air out of the Obama-Sebelius tag team attack.
Let's take a look at the ABC News interview with WellPoint CEO Angela Braly.
Q: How does WellPoint make its money?
A: The Indianapolis insurer made about $4.7 billion in 2009, a total stoked by the $2.2 billion it received from the sale of a pharmacy benefits management subsidiary.
Outside that, WellPoint made most of its money through employer-sponsored group health insurance. It reported $2.4 billion in operating profit from that segment last year, which amounts to about 58 percent of its total earnings.
The insurer has said it gets only about 10 percent of its operating income from individual health insurance like the kind it sells in California.
For sure, $4.7 billion sounds like a lot of money to the average Joe.
But so does a $1.4 trillion dollar deficit. I don't recall anyone complaining about that.
But I digress . . .
WellPoint made almost half their profit through the sale of a PBM subsidiary. MOST of their profit comes from employer group health insurance plans.
No one is complaining about that either. So what about those individual health insurance plans that have a target on their back?
Only 10% of their revenue, not profit, revenue, comes from the sale of individual health insurance.
The interview goes on to address why individual health insurance premiums in California will be increasing by double digits, and why businesses don't set prices based on profits.
At least for those with an open mind.
Or those who don't have a personal agenda . . .