The fine may be a million bucks, but the PR damage is much worse.
WellPoint’s fine is for cancelling insurance policies for members who filed claims; the cancelled members alleged that WellPoint went thru their applications with a very fine toothed comb, looking for any discrepancies, errors, or misstatements. The objective was to find ways to cancel insurance policies.
The state of California has found this business policy to be reprehensible and illegal.
It’s also stupid.
WellPoint may not have noticed, but the entire country is talking about health care reform. That includes regulators, policymakers, lobbyists, and voters. Many are arguing against single payer, claiming that the private market will serve much better than a government bureaucracy.
WellPoint’s behavior puts the lie to that argument, and plays right into the hands of the single payer advocates.
And this is not an isolated incident. Regulators looked at 90 cancelled policies, and in every case found that WellPoint violated state regulations banning cancellations for inadvertent misstatements. Moreover, this is not just WellPoint; other insurers are also under the regulatory microscope.
Correction. This is not stupid.
It is amazingly, incredibly stupid.