The Wall Street Journal Editorial Board Fails At Math

And fails even worse at defending Wellpoint's insurance rate hikes.

WellPoint's California unit, Anthem Blue Cross, recently informed nearly 700,000 individual insurance customers of premium increases of up to 39%. President Obama jumped on the announcement, claiming in a pre-Superbowl TV interview that the hikes were a "portrait of the future if we don't do something now."

Health and Human Services Secretary Kathleen Sebelius quickly piled on by ordering a federal inquiry, claiming a company that made "$2.7 billion in the last quarter of 2009" could not "justify massive increases." Senate Majority Leader Harry Reid ripped WellPoint and other "greedy insurance companies that care more about profits than people." And right on cue, House baron Henry Waxman scheduled a hearing, where he will not blow kisses.

Now, keep that in mind.  Wellpoint made a $2.7 billion quarterly profit in 4Q 2009.

He ought to subpoena California's political class because Wellpoint's rate hikes are the direct result of the Golden State's insurance regulations—the kind that Democrats want to impose on all 50 states. Under federal Cobra rules, the unemployed are allowed to keep their job-related health benefits for 18 to 36 months.

California then goes further and bars Anthem from dropping these customers even after they have exhausted Cobra. California also caps what Anthem can charge these post-Cobra customers.

Most other states direct these customers to high-risk pools that are partly subsidized, but California requires the individual market to absorb the customers and their costs. Even as California insurers have had to keep insuring these typically older and sicker patients, the recession has driven many younger, healthier policy holders to drop their insurance—leaving fewer customers to fund a more expensive insurance pool.

This explains why Anthem lost $58 million in California on its post-Cobra customers in 2009. If WellPoint didn't raise premiums amid these losses, it would soon be under assault from its shareholders, if not out of business. 

Fail.  Even with those "post-Cobra customer losses" in California over the entire year, the company still made almost 50 times that amount in profit in just the fourth quarter.

So we're suppose to believe if Wellpoint doesn't raise its rates on this segment of Californians by almost 40%, that Wellpoint will go out of business because $58 million in losses is more than $2.7 billion in profit.

Right.  But we can't have health care reform because the government is going to rip us off and they are evil.

Jesus wept.