On a cold and rainy Dec. 2, while the Senate in Washington was slogging along debating health reform, a remnant troupe of public-option-supporting Organizing for America stalwarts stood outside the corporate headquarters of WellPoint, Inc. in the center of downtown Indianapolis. Minutes before their demonstration started, three single payer activists slipped in and out of the WellPoint office dropping off a shareholder resolution for next May's annual meeting.

WellPoint, also known as Anthem or Blue Cross, is the perverted spawn of what was once a charitable venture known as Blue Cross/Blue Shield of Indiana. From the '40s up into the '90s Blue Cross of Indiana was like all the other Blues around the country, non-profit with a charitable mission. Its board of directors included physicians, hospital administrators and labor and community leaders, and it existed to serve the needs of patients.

"WellPoint, also known as Anthem or Blue Cross, is the perverted spawn of what was once a charitable venture known as Blue Cross/Blue Shield of Indiana."

But the health care market had become increasingly cutthroat, and in the aftermath of the Clinton Health Plan's crash and burn, there was a huge consolidation in the industry. Doctors went from solo or small group practices into larger and larger groups. Hospitals that had been independent since their founding merged, and national chains of for-profit hospitals grew powerful and predatory.

The most significant consolidation of all happened in the insurance industry, yet it is the least understood and appreciated. Health insurance was once predominantly state or regional non-profit Blue Cross plans or other regional non-profits, and a few national for-profits. Now there are nine major national health insurers dominating the country. They are for-profit, beholden not to their customers but to their shareholders.

Like most consolidated industries, they don't compete head to head in most markets but rather divide up the markets and crush smaller, local competitors. Did I mention that the insurance industry is exempt from federal anti-trust laws? The American Medical Association's 2007 report Competition in Health Insurance: A Comprehensive Study of U.S. Markets" found that in the majority of areas studied, a single health insurer dominated the market. So much for competition.

The field these behemoths compete on is in Washington, D.C. They can buy and sell senators and dominate regulatory agencies. More on that later after we come back to the story in Indiana.


Read the Shareholder Resolution

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In the early '90s the Hoosier Blue Cross leadership decided that the future looked bleak for non-profit health insurance. They began a series of maneuvers to radically restructure the company. They took off the gloves. Goodbye to a charitable mission. Goodbye to being tax-exempt. Hello, Wall Street.
"Just days after the Indiana Department of Insurance commissioner approved Anthem's demutualization proposal, Anthem announced that its IPO had yielded $1.7 billion."
Blue Cross became Anthem, turning a non-profit into a mutual company. This set the stage for demutualization and a public stock offering (IPO). In 2001 Anthem announced its intention to convert from a mutual insurance company to a stock corporation and filed its demutualization proposal with the Indiana Department of Insurance. By this time Anthem had already completed a frenzy of mergers and acquisitions of Blues in Colorado, Connecticut, Kentucky, Maine, New Hampshire, Nevada and Ohio. None of policyholders in those states had any say in this matter.

Just days after the Indiana Department of Insurance commissioner approved Anthem's demutualization proposal, Anthem announced that its IPO had yielded $1.7 billion.

Now came the mother of all mergers. Blue Cross of California had been following a similar path, beginning with its demutualization in 1993 and subsequent acquisition of Blues in Missouri, Georgia, Virginia and Wisconsin, as well as acquiring the health divisions of Massachusetts Mutual and John Hancock, among others. They changed the corporate name to WellPoint. In 2004 Anthem and WellPoint merged, becoming the largest health insurer in the United States, with 34 million lives covered.

The $20.8 billion merger created a cornucopia of compensation for executives of both parent companies. Not only did Anthem's Indiana CEO, Larry Glasscock, receive a $42.5 million dollar bonus on top of his base salary of $3.7 million, other top Hoosier executives pocketed $4 million to $16 million each. The CEO of WellPoint in California, Leonard Schaeffer, retired on a package valued at < a href="http://www.consumerwatchdog.org/patients/articles/?storyId=13284">$337 million. I am not making this up.

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At the close of 2009, hope is gone that we will see universal health coverage come out of this Congress. Single-payer advocates like myself never really believed it might come this time around, but we couldn't help but get our hopes up. It remains to be seen whether any bill that passes will end up being an incremental step in the right direction, but it won't be a slippery slope.
"Our Hoosier 'Democratic' Senator Evan Bayh has distinguished himself as a hindrance to any reform bill that is not in the best interests of the hometown insurance company."
Our Hoosier "Democratic" Senator Evan Bayh has distinguished himself as a hindrance to any reform bill that is not in the best interests of the hometown insurance company. Although he and his wife Susan proclaim no conflict of interest, she sits on the WellPoint board. Her compensation for serving on that board, as reported to the Securities and Exchange Commission, is $330,000 a year, more than twice Evan's salary of $160,000 as a senator.

Progressives disagree about how to proceed from here. I spoke with T.R. Reid a few weeks ago in Boston. He is the author of the PBS Frontline Sick Around the World and a new book, The Healing of America. He makes a strong case for getting to universal care while keeping the private insurance industry, although he makes it clear that no nation has achieved universal care using for-profit companies.

Can universal health care be accomplished within our system of for-profit insurance companies? I've always favored the single-payer approach, which seems more feasible to me than taming the insurance behemoths. Reid thinks we've got to consider the taming approach, so some of us decided to put that idea to the test, in the form of a shareholder resolution.

We delivered the resolution on that dark and rainy day. Now we await word about whether the SEC will require WellPoint to include it in the proxy for the annual meeting. It is a long shot, to be sure. But if Congress won't take on the insurance industry, then someone has to.

I'll keep you posted on our progress.

Rob Stone, M.D., is the director of Hoosiers for a Commonsense Health Plan. He can be reached at grostone@gmail.com.