|Traded as||NYSE: WLP
S&P 500 Component
|Industry||Managed health care|
|Founded||Anthem Insurance and WellPoint Health Networks merger in 2004|
|Headquarters||Indianapolis, Indiana, USA|
|Key people||Joseph R. Swedish - CEO|
|Products||Blue Cross Blue Shield|
|Revenue||US$61.7 Billion (FY 2012)|
|Net income||US$2.66 Billion (FY 2012)|
|Total assets||US$58.96 Billion (FY 2012)|
|Total equity||US$23.80 Billion (FY 2012)|
WellPoint, Inc. is the largest managed health care, for-profit company in the Blue Cross and Blue Shield Association. It was formed when WellPoint Health Networks, Inc. merged into Anthem, Inc., with the surviving Anthem adopting the name, WellPoint, Inc. and began trading its common stock under the WLP symbol on December 1, 2004.
WellPoint was formed in November 2004 following a merger of Anthem and WellPoint Health Networks Inc. The merger was structured as Anthem acquiring WellPoint Health Networks and rebranding itself WellPoint, Inc. When the deal was originally announced in October 2003, the merger was set at $16.5 billion. The fair market value of the merger when completed in December 2004 was approximately $21 million. At the time of the merger's completion, WellPoint was the largest American insurer.
Anthem began in Indianapolis, Indiana in the 1940s as Mutual Hospital Insurance Inc. and Mutual Medical Insurance Inc. The companies grew significantly and controlled 80% of the medical insurance market in Indiana by the 1970s. Mutual Hospital Insurance and Mutual Medical Insurance, now known as Blue Cross of Indiana and Blue Shield of Indiana, entered into a joint operating agreement in 1972. The two companies merged into Associated Insurance Companies, Inc, a holding company, in 1985.
Associated Insurance Companies began expanding outside of Indiana in 1986 and acquired numerous insurance companies and created new subsidiaries. The company changed its name to Associated Group that same year to coincide with its expanded focus. Associated Insurance's acquisitions included Anthem Health, Inc., a national company offering group life and health insurance; Raffensperger, Hughes & Co., Inc., Indiana's largest investment bank; and the Shelby Insurance Co., a property and casualty insurance business. Associated Insurance also founded Acordia, brokerage that sold and serviced insurance and employee benefit programs, in 1989. Associated Insurance took Acordia public in 1992. In 1993, Acordia acquired American Business Insurance for $130 million and the Federal Kemper Insurance Company for $100 million. Associated Insurance sold Acordia to a group of private investors in 1997.
In 1993, Associated Insurance purchased the operator of Blue Cross and Blue Shield of Kentucky, Southeastern Mutual Insurance Company. The deal was the first cross-state merger of major Blues plans in America. By the end of 1993, Associated Insurance posted annual profits of $65.4 million with $3.4 billion in revenue.
Associated Insurance set up Anthem Blue Cross and Blue Shield in 1995 after acquiring Community Mutual Insurance, a provider of Blue Cross and Blue Shield insurance plans in Ohio with over 1.9 million policy holders.
After selling off many of the businesses that the company had bought over the years, Associated Insurance renamed itself Anthem Insurance Company in 1996 and began to exclusively focus on healthcare benefits. Anthem later added 850,000 policy holders with its purchase of Blue Cross and Blue Shield companies in New Hampshire, Colorado, Connecticut, Maine and Nevada.
Revenue in 1999 had grown to $6.3 billion. Among its customer base were 2.4 million PPO enrollees and 964,000 with HMOs. In Ocotber 2001, Anthem converted from a mutual insurance company to a publicly held stock company, which made it the 4th largest public managed health care company in America.
As the company continued to grow to 11.9 million members, it purchased Trigon, the largest insurer in Virginia, for $4.04 billion. In October 2003, Anthem announced it would acquire WellPoint Health Networks for $16.5 billion. The deal was completed in December 2004. The fair market value of the acquisition at time of its completion was approximately $21 billion. The newly merged company was renamed WellPoint, Inc.
WellPoint Health Networks
The origins of WellPoint Health Networks trace back to Blue Cross California. Blue Cross of California organized the company as the division responsible for BBC's managed healthcare offerings, which was the most profitable segment of BCBS's operations. It became an independent for-profit subsidiary with an IPO in January1993. Blue Cross of California retained 80% of the company and had "nearly all" of the company's voting shares.
In April1996, the company completed its acquisition of Massachusetts Mutual Life Insurance Company's group life and health insurance subsidiaries for approximately $380 million. With the acquisition, WellPoint had nearly 4 million policy holders, which made it the second largest publicly held managed health company in the US. WellPoint continued its expansion and acquired into 10 other states such as Massachusetts, New York, New Jersey, and offer life, disability, and dental insurance to all its rosters.
A year later, in March 1997, WellPoint acquired the group health and life businesses of John Hancock Mutual Life Insurance Co. for $86.7 million. With this acquisition, WellPoint expanded its presence into Michigan, Texas, and the mid-Atlantic and gained a unit that concentrated on serving the needs of large employers. By 2000, the company's net income was $342.3 million with revenues of $9.23 billion. That same year, WellPoint acquired Rush Prudential Health Plans, a Chicago provider, for $204 million. In March 2001, the company acquired Cerulean Companies, the parent company of Blue Cross Blue Shield of Georgia. WellPoint acquired RightChoice Managed Care, a Missouri-based company, for $1.5 billion in 2002. Other acquisitions include HealthLink in the mid-West, MethodistCare in Houston, Texas, Golden West Dental and Vision of California, and Cobalt Corporation in Wisconsin.
WellPoint acquired Lumenos, a provider of consumer-driven health plans, for $185 million. In December of that year, the company acquired WellChoice, a New York-based Blue Cross Blue Shield provider, for approximately $6.5 billion. In 2007, WellPoint acquired American Imaging Management, a company that creates software to help physicians choose cost-effective locations for their patients to receive medial imaging tests. A year later, WellPoint purchased Resolution Health, a firm that analyzes patient history for potential medical problems such as adverse drug interactions. The company expanded its dental insurance business with the acquisition of DeCare Dental in 2009.
In 2011, WellPoint acquired CareMore, a Cerritos, California-based company that provides insurance and care centers for elderly patients. In 2012, WellPoint acquired Amerigroup for $4.9 billion anticipating significant revenue growth due to Medicaid expansion under the Affordable Care Act.
Quality of care
In the category of "Meeting National Standards of Care" California's state patient advocacy office gave Anthem a rating of 2 out of 4 stars in its annual report card. In 2014 it received 3 out of 4 stars in the same category.
Opposition to health care reform
The former Vice President for Public Policy and External Affairs at WellPoint, Elizabeth Fowler, is currently the Senior Counsel to Max Baucus, the chairman of the Senate Finance Committee and a leading opponent of the public option in health care reform.
In March 2010, WellPoint announced it was reclassifying some of its administrative costs as medical care costs in order to meet new loss ratio requirements under the health care law. (The law requires insurers to spend at least 80% or 85% of customer premiums on health care services, depending on the type of plan.)
In August 2009, WellPoint’s Anthem Blue Cross unit, the largest for-profit insurer in California, contacted its employees and urged them to get involved to oppose Congress' plan for health care reform. Consumer Watchdog, a nonprofit watchdog organization in Santa Monica, asked California Atty. Gen. Jerry Brown to investigate its claim that WellPoint had illegally pushed workers to write their elected officials, attend town hall meetings and enlist family and friends to ensure an overhaul that matches the firm’s interests. According to Consumer Watchdog, California's labor code directly prohibits coercive communications, including forbidding employers from controlling, coercing or influencing employees' political activities or affiliations. WellPoint had not been contacted by the California attorney general and had not seen any complaint.
Cancellation of policies
In July 2008, WellPoint subsidiary Anthem Blue Cross agreed to a settlement with the California Department of Managed Health Care. To resolve allegations of improper policy rescissions (cancellations), WellPoint paid $10 million and reinstated 1,770 policy-holders whose plans they had cancelled. They also agreed to provide compensation for any medical debts incurred by these policy-holders in the meantime. However, WellPoint did not officially admit liability.
In 2010, a report in Reuters alleged that the Anthem Blue Cross subsidiary improperly singled out women with breast cancer for cancellation of their policies shortly after they were diagnosed with breast cancer. The Reuters story said that Wellpoint "using a computer algorithm, identified women recently diagnosed with breast cancer and then singled them out for cancellation of their policies." The story not only caused considerable public outrage, but led Secretary of Health and Human Services, Kathleen Sebelius, and President Barack Obama, to call on WellPoint to end the practice.
Giving for uninsured
In 2007, WellPoint pledged to spend $30 million over three years, through the company's charitable foundation, to help the uninsured. In March 2010, the Los Angeles Times reported that WellPoint's tax records and website showed that the company gave only $6.2 million, which amounts to less than 0.0001% of the posted profit earnings of over $65 billion for 2009. The company disputed that, saying that the foundation did fulfill its $30-million commitment by mid-2009, but declined to provide any financial details to support its position.
In 2009, Anthem Health Plans of Maine, a WellPoint subsidiary, sued the state of Maine for the right to increase premiums further. Since Maine licenses insurance companies through its Department of Insurance, Anthem would need the state's permission to raise rates.  The Court disagreed with Anthem and found that, unlike other forms of insurance, the Maine Insurance Code does not require the Superintendent to consider profits at all.
In February 2010, WellPoint announced that some Anthem Blue Cross individual policies in California would see a rate increase as high as 39%. This announcement resulted in an investigation by the US Federal and California government regulators.
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