Time to Rethink Our View of Private Health Insurers?

The Wall Street Journal  “Price Strategy Puts WellPoint in Bind” reports that the CEO of America’s largest health insurer, Angela Braly, is having difficulty balancing shareholders' need for profits with unaffordable premiums. To cope with rising medical expenses,  WellPoint (WLP), sharply increased premiums. WellPoint lost 189,000 members in the first six months of 2008 and predicts 150,000 more will be lost by year end. Now neither shareholders nor policy holders are happy.

WellPoint’s membership loss story parallels UnitedHealth Group (UNH) membership losses, with some interesting twists. Premium increases had to be more dramatic because its increased medical costs took WellPoint by surprise. “Lengthy consolidation of old claims-processing systems” delayed claims processing and the revelation of increasing medical cost trends.