sophisticated lawyers and politicians that were pounding the amended to say that. but that is not what they did. therefore, the 14th amendment, specifically the privileges or immunities laws, cover more and less than the bill of rights. less than the bill of rights. @@@@@@@@@ @ @ @ @ those of the framers that we're talking about in this context, that was the original constitution. now we're talking about the 14th amendment. they're not talking about

incorporating the second amendment, the first amendment, what have you. they said that we will not give all individuals or persons or citizens, depending on the clause, equal protection under the law. . rocess of the laws, and privileges or immunities. that means that privileges or immunities based on the understanding of that term in 1868 -- if you're a much to try to understand what the public meaning of that meeting is and with the text and history of the 14th amendment lead you to, you have to do it and the ratification of that amendment, not 2010 or 1937 or what have you -- and what that meant was that building upon the decision owas that there were natural

rights and certain political and civic rights. that is what that meant. it does not mean that, all of a sudden, the second amendment, the first amendment, what have you, are incorporated. but the codification of the rights in the first and second and fourth amendment is persuasive evidence of what privileges or immunities are. when we're talking about the macdonald case, it is not really right to say is the second amendment inc. against the state's by the privileges or

immunities law or even by the due process clause. it is notñi even correct to say whether the second amendment is applied or extended by one of these clauses. the right formulation, the way to think about this, if you're going to be faithful to the constitutional text and history, separation of powers, how the constitution was constructed, is whether the right to keep and bear arms supplies or is extended to the states and how is it extended? i suggest to, first of all, that it does apply. if the only reason the you came here is to find out whether the right to keep and bear arms is going to be applied to the states and whether chicagos gun

ban is going to fall, lend -- chicago's then dan is going to fall, let me and your suspense. yes. there you go. the bigger issue, as we have discussed, is what this means for the future of liberty and for the fidelity of the constitution, fundamentally, the rule of law. we have warped our understandings of what rights are covered and which are not. justice scalia is not my favorite justice, but he is certainly the most quotable. what the justices do when they try to figure out when something is protected by the constitution is that they said around and

they say is that fundamental? is that undue burden on something fundamental? that is not a principled way of doing constitutional jurisprudence. that is why we have debate over judicial activism. we have had to these debates, both in terms of legal cases and whenever a new supreme court justice or a lower court judge is nominated. we have the new so meiesotomayo. that has become a bit of a farce.

that is beyond the scope of our discussion here. given what we have just gone through -- the right to keep and bear arms -- you look at what it meant, whether it was understood to be a privilege or immunity in 1868. it clearly was. the 14th amendment was put in in large part to protect the individual liberties of freed slaves and unionists in the border and southern states. it is deeply rooted in our tradition. the article that i mentioned, we suggest that the test is applied [unintelligible] i think that is an appropriate

method of seeing whether a particular rite is covered by the privileges or immunities clause. it is quite clear that the right to keep and bear arms is so deeply rooted, so specifically described, that there really is no controversy that it would be protected. to stay or to get more faithful to the constitution and to do far more for the cause of freedom than merely extended the right to keep and bear arms, the court, if it interprets the constitution as it should, will say that privileges or immunities is the way to go, is where we find the right to keep and bear arms.

therefore, complete prohibitions on hand guns for self-defense have to fall. i doubt we will get nine votes for that position. -realistic best case scenario is interesting. justice thomas would find that the right to keep and bear arms falls into that. but the four liberal justices might like privileges and immunities for the reasons that doesn't describe -- that doug described. the other four justices, perhaps scared off by a pandora's box or for other reasons, will just stick with the substitute process and there's no need to

revisit slaughterhouse. in that event, you'd have five beds for privileges and immunities and five votes against -- and four votes against. that is what i am hoping for. thank you very much. [applause] . >> i'm with the u.s. bill of rights foundation.

whether this is -- with the due process clause prevails, what is this: the look like? what is the difference going to be? what is the world going to look like and did you process? -- under due process? is it really going to change the way we identify substantive rights? exactly what will the world look like? >> i don't think immediately the world will look very different at all. one of the reasons why this is a good case to get the court to rethink these issues, because this is, i think there will be broad agreement that the enumerated substantive rights

laid out in the bill of rights constitute privileges and immunities. it is a fairly narrow rethinking of the privileges of the immunities clause. i think that the court will either -- at least initially -- retain its jurisprudence or not overturn it in is -- in this case. if they overturned slaughter cashouse, that will be a good dy for us. we have a report that is available at our web site,

constitution.org, which lays out in detail the argument that we make in our brief. you can read the history and look at what the framers were looking at. i think that is where the debate about what the privileges and immunities clause should mean begins. >> the other virtue of this case is that the hemmer case was a case of first impressions because there was so little for the court to go on. they had to look to the original understanding that surrounded the second amendment. and when it came time to consider the next question, whether it be of individual rights or applied to the state,

you have a similar problem to go back to first principles. and that is why the principal and immunities clause was in the macdonald case, because we have just the kind of case that is appropriate for raising that question about whether slaughterhouse was correct from the outside and whether the courts should have interpreted cases under the privilege and immunities clause more often than under the due process clause. this is the ideal vehicle for revisiting that fundamental question. up in the back, the council in the macdonald case for the plaintiff? >> a great panel here and now wanted to make a couple of quick announcements. a very impressive panel.

i've chosen to give each of you five minutes of my time tomorrow. [laughter] you can ask them if you want. i just wanted to recognize the great people behind the case and i have a lot of help from scholars and lawyers and other people that said it would not be possible without the work of so many people. i wanted to recognize some of the people who are actually the planets for the case. if you are a planned, will you please stand up? -- if you are a play to -- p lantiff, please stand up? these to the people that are going to get your rights back. going to get your rights back. >> thank -- the next question is for the gentleman in the aisle, here.

>> i am unaffiliated. one concern that i have with the immunities clause, unlike the due process in the bill of rights, it applies only to a person born or naturalized in the united states. it would not apply to corporations or immigrants, whether legal or illegal. i would wonder if any of you have considered whether the limitations on the concept and the difference between the scope of the clause that limits it only to united states citizens. naturally, united states citizens have little significance. >> i would just say that that is a serious concern. let's try and be clear that the citizenship clause says who is

citizen and that includes naturalized immigrants. it would not exclude all immigrants. exclude from the protection of national rights when people are not citizens of the united states. to process and equal process applies to any person within a state jurisdiction. and on citizen would still be able to get rights under those clauses. i'm sorry. as far as in corp., the court has made it very clear that it does not apply to non-citizens. that is already a part of binding law. >> i just got my green card 10 months ago. i am enjoying the fruits of the rest of the constitution. [laughter] there is every reason for having different types of constitutional protections for

citizens versus non-citizens and legal immigrants versus illegal their centers, depending on what right we're talking about that applies differently. the equal protection clause -- all the sudden you can enslave non-citizens are something like that? i think the reason the citizenship language was used was because it applies not just to natural rights and not to those rights enumerated in the bill of rights, not necessarily all of them, but those of the best examples of the codifications of natural rights, because it also includes certain civil political rights which understandably non-citizens do not have. >> this gentleman right here.

>> i am with george mason school plot. mr. shapiro shared with us realistically predicted the outcome of the case. i would wonder if the other panelists would way and what would be in the case. >> do you have a sense of the matter, tim? >> as far as the issue at the slaughterhouse cases are concerned, i think that most of that justice had expressed at least some discomfort with that condition. one case written by justice stevens, the majority in that case did not say one way or the other, but they -- seem to regard slaughterhouses questionable -- slaughterhouse as questionable. the real concern as the court

might take an easy way out and incorporate gun rights under the due process clause. that is a serious problem because you can always use that excuse to perpetuate legal error. suppose the supreme court would say that the first amendment does not guarantee the right to freedom of speech and letter says, well the eighth amendment does. anytime a free speech comes before the court saying that you are wrong, the court could keep using the aids amendment. the argument is that we do not have to reassess that old case because we cannot use this other area of law and continued to do so. then there is no way to correct the error. there is no better way to revisit slaughterhouse than to say that it was wrongly decided. i think that substantive due process is not invalid. it is as much of valid component

of the american constitution as anything else. and part of the argument in the brief that we filed is that substantive due process is a well understood and generally accessible. the time the 14th amendment was written. revising the privileges and immunities clause should not give the court an excuse to abandon individual rights. that is the really answer your question. -- that does not really answer your question. [inaudible] >> there is a front-page story in the "washington post" about this case which has a quote from justice scalia that i have never seen before, where he pauses -- calls the privileges

and immunities clause as flotsam. he has also said in an interview that he gave to the hoover institute in 2008 that he believed that incorporation it's all -- itself is probably false. the fascinating thing about this case is that you have a great or regionalist from the hell -- originalist from the heller case really badly misreading the original meaning of the 14th amendment. the question i find most fascinating in this case is the question explored in the "post" today -- howell are most public proponents of originalism

dealing with the incredibly powerful argument that scholars and organizations across the political spectrum -- the original public meeting of the 40 the amendment spoke to incorporation and required overturning the slaughterhouse cases. >> one of the fascinating aspects of this case is that it brings to the for the problems conservatives have had with judicial mischief and judicial activism on to this court. the conservatives on the court our textile --u are --alist -- textualists. they have to make sense of the text staring them in the face. for 150 years, they have ignored that taxed as if it did not exist.

there is the text that says that no state shall abridge the privileges or immunities of citizens of the united states. and it has been inoperative for all this time. it is surely there for reason. it is not there for surplusage. those who want to be t extualists must look at this. they have to do this and go back to the history of it, which all three of our speakers today have eloquently discussed, and when they do, it seems to me the statement that justice scalia has made will perhaps come in for some reconsideration. one would hope that they do. right here. [inaudible] >> i am unaffiliated.

it seems to me that you're saying that if the court reconsiders the privileges and immunities clause, you are opening a pandora's box. you did not really explain why. >> that is the concern. i am saying it is not opening a pandora's box. it is done properly, it will actually close the pandora's box and doc's breakfast, to mix metaphors, of jurisprudence that has come out of the zero warped substantive due process doctrine and incorporation and all the rest of it. our bifurcation of rights and other costs and all persons. the concerns -- if and on where you live on the constitutional spectrum. if you are progressive, you are worried about freedom of contract, property rights, and

these sorts of things. these could strike down all sorts of potentially health and safety regulations, licensing regulations, prevent progressive a good government. if you are libertarian, you are worried that out of that pandora's box could come to write -- the constitutionalized right to health care and education and what have you. going back to philosophy 1 01, all sorts of problems that we see with that. and conservatives sharing many of the libertarian concerns about economic growth rights, they also have the concern for triple midget polygamous marriage and various kinky sexual things with the invented

privacy rights as opposed to properly protected privacy rights. the things they should not be there. there are all of these concerns. i don't think the concerns are unwarranted. i think the concerns on the progressive side are warranted it, but if you look at the original meaning of the privileges and immunities clause and the protections, you really have to find that that right is equally protected as understood at the time. so lot of these worries could fall away. >> just to add to that, if it goes back to the first question, the difference between using privileges and immunities, and the difference in using substantive due process. a lot of the problems is that using due process as it is taught opens up the analysis of does the justice believe that it is essential to the course of ordered liberty or these various

abstract terms that call for political philosophy. i am all for use in political philosophy and jurisprudence, but the classical liberal philosophy which annotated the 14th government, not one is rooted in the constitution whatsoever. and using due process, we refer to that. whereas with privileges and immunities, it becomes more historical and applies to think not necessarily in the bill of rights, like habeas corpus. i think it ought to confess -- comfort conservatives that this opens the door for the court to invent new rights, but is this indeed what historically has been the philosophical framework for this being a privilege or immunities framework? >> if there was a concern about of run amok court under the

privileges or immunities clause , as much as there is under the due process clause, because the court is much more open-ended and history demonstrates that, because under that clause, we have had this nonsense like fundamental and non-fundamental rights, a judicial review, and all the things that came out of that. >> all of this analysis keeps in mind there is no way to revise the constitutional document and prevent justices ready to usurp from using that power. they get up and say congress are going to do all these nasty things, and then if not, we are truly in a wretched condition. it has to depend on the people who are in the judiciary, and you have to depend on the philosophical flow in american society.

we need to focus back on the philosophical principles of individual liberty, and that is the only way that this can work. >> i see stuart taylor back there. if you could give him the microphone, we could hear from one of the leading legal journalist in the country today. >> i'll ask my question of the candle first. i am with the "national journal." if the court adopts your interpretation, down the road you would hope that this would influence legal doctrine not just in the way articulate it. what expansion of rights or what new rights would you hope to see coming along sooner or later in this way, and for example, same- sex marriage, would that be one of them? >> i think he would have to go

back to what we have already said. the main reason we are in this is because this is an is because this is an opportunity to >> this is about the constitution in history more than it is about any from what has happened already or what is going to happen in the future. i think that the debate, as we discussed, has been distorted in a critical way because the centerpiece of the 14th amendment was taken out of the document 140 years ago. if the court even recognizes that history without overturning slaughterhouse, i think it would be a huge victory for the constitution and the country.

if it says, as a matter of text and history, that the 14th amendment was intended to protect substantive rights and recognizes that the framers intended to do that plea the immunities clause, that is a huge victory for the constitution. it might not choose -- to change anything about where the law is . question, i think we have all been talking about the history. the treatment of slaves and unionists and the south is really at the core of what the framers were about. you can look through that history -- if the court starts with myers, which is about being routed in the treatment of the slaves, and i think that rulings

like those to drop from the history of the slave families. one thing that we have not really talk about, the concern out of the left for opening up the privileges and immunities clause is that it will return us to the gray areas. like citizens united, that is an entirely valid concern. the answer to it is that -- as tim recognizes, privileges and immunities clause is limited to citizens and not corp. specifically, and two, there are economic rights traditionally, the right to contract, an individual's right to earn a good living, if they're living,

labor and contract -- some of the cases that some groups have brought on economic liberty are powerful and routed in the history in the history of treatment of slaves and unionist after the war. the idea that we cannot have laws, that congress cannot pass laws on the 14th amendment to protect labor's and workers from mistreatment, i think it is completely antithetical to the history of the 14th amendment and should never be stored under the privileges and immunities clause. >> question? >> i am bret thomas.

a historical question. presumably when the supreme court essentially eliminated the core of the 14th amendment, many the man who it pass those protections originally were still around. was there historical reaction to what happened and was there any response to its historically? >> as far as i know, surprisingly little at first. it was an 1875, some of the ku klux klan bills, and then there was a discussion in congress about what the privileges and immunities clause was supposed to mean. but i have not been looking in the newspapers and news -- and magazines and i do not know. slaughterhouse was 1873, the same year that the supreme court relying on its decision in slaughterhouse held that women had no right to practice law and that therefore the state of

illinois could prevent one from taking the bar exam. it was a couple of years before the massacre case before the court relying on slaughterhouse said that the right to peaceably assemble and the right to bear arms was not a federal a protected right for purposes of a case where -- the worst race riot during that era -- and therefore it signaled a general retreat from reconstruction. that was felled by the president, congress -- everyone backed away and condemned the people of this out to another century of oppression by their state legislatures. part of the reason -- remember in the 1870's, the republicans lost big time in the election. there was a huge backlash against the republicans for economic reasons. and democrats came into office,

a poster reconstruction. it softened the al rage over the decision of slaughterhouse, because it was one among many such examples of the general retreat from the civil rights protections. >> one of the things that you mentioned in 1973, extraordinarily important. in 1866-1868, it was the heyday of concern about the south and reconstruction. by 1873, the country was exhausted from reconstruction. it was proving to be much more difficult to address the recalcitrant in the south, and there's a sense in which the country really wanted to move on. >> particularly in louisiana. did you know that there is a monument to white supremacy in new orleans? it has been covered up and moved away to hide it. but it commemorates the whites

only who died in a race riot over the transfer of government power from the democrats to republicans. it was this extremely violent, dangerous, and troubling times, and the beds were just ready to lead southern whites suppress. >> slaughterhouse came out of what they called a still of corruption in new orleans. peewee long -- huey long said he wanted to be buried in new orleans said that when he died, he could remain politically active. [laughter] last question because it is almost time to retire upstairs. >> he said that reconstruction, if i might point a term. i ran across a speech from the

author of the privileges and immunities clause. in that speech, he says that the rights of pro-union and anti- slavery activist in the south is being violated. if the states did fayalite these rights, it calls for the reconstruction of the political fabric on a just basis. it's important to keep in mind that is why we use the word reconstruction. it was an effort to change the federalist structure to protect individual rights against the state governments. that was the whole purpose. and if we start picking at some of the language and forget about that being the crucial purpose of the 14th amendment, we are missing the forest for the trees. >> indeed, the great task of the

framers of the 14th amendment was to fundamentally change that federalism relationships in the country to prevent against state violations of our rights which had not been possible since the baltimore decision. when the majority of the slaughterhouse miss that rationale, they did not mean that change federalism relations in the country. i could not be further from the truth but that was what was meant by the ratification of the 14th amendment.

>> in a few moments, a hearing on increases in health-insurance premiums. following that 3.5 hour hearing, representatives to the sawyer talks about fiscal responsibility >> on washington journal tomorrow morning, we will talk with senator jeff bingaman. howard rosen of the peterson institute for international economics will explain how on employment insurance works. our guests include roslyn brock and will look at the home when security departments budget with journalist mickey mcartor.

>> a couple of things to tell you about tomorrow morning. the senate commerce committee continues to examine the toyota recalled. this year on c-span at 10:00 p.m. eastern. also, representatives from google, mcafee and elsewhere speak before the senate judiciary committee. as washington post international correspondent, t. r. reid has traveled the world. his views include the united states and europe and the healing of america. join our 3 our conversation with t.r. reid and your phone calls live, sunday, on c-span2.

>> now, a hearing on health insurance premium increases by anthem blue cross, a subsidiary of wellpoint inc.. the increases, reported to be as high as 39% primarily affect california. it -- this is 3.5 hours. >> before we begin, i would like the contents of a supplement a memo be entered into record. the supplemental report is in regards to our investigation in the small business health insurance market. we had a draft last night.

and the accompanying box -- documents with that memo. without objection, they will be entered into the record. i should also note that members will be going back and forth to the subcommittee on telecommunications which many of our members are members of both committees. the ranking member and chairman will be recognized for a 5 minute opening statement. other members will do recognize for a three minute opening statement. i will begin. we learned that policies for an adequate when needed most. we also looked into the problem of small businesses purging,

which is when a health insurance company raise its premiums to the point that it is an affordable for businesses to continue their health coverage. lastly, we held two hearings on rescissions, which is a practice of terminating coverage after a policy holder becomes sick so that the company can avoid paying expensive and much needed health care. we will focus on great increases in the insurance market in california. we will examine what is happening when insurance companies have no accountability. while most americans receive health insurance through their employer or for government assistance programs such as medicare or medicaid, more than 50 million americans receive their health care assurance through the private market. the individual health insurance market is unique in that companies are limited in their ability to spread the risk among the larger population.

today's hearing will focus on wellpoint. this is a national problem. according to a disturbing report, wellpoint has implemented its proposed double digit rate increase in 14 -- in 11 of the 14 states in which they operate. in maine, wellpoint raised individual rates by 23%. this will endure at a rate increase of 21%. in georgia, there was a 21% increase and are anticipating a similar rate increase again the sure. in the west, colorado expects average increases of nearly 20% and as high as 24.5%. as residents of my home state

know, it is not placed on the individual market. on january 26, 18,000 policyholders have possible rate increases for the coming year. as it turns out, nearly 700,000 wellpoint subscribers released -- receive a rating creases. the proposed rate increases are necessary due to rising medical costs and declining business resulting from economic difficulties, not from padding their bottom line. we discovered internal documents that suggest a closer relationship. the documents reveal that

wellpoint sot inflated ipremium payments. wellpoint also appears to be directing policyholders to lower medical claims while warning executives salaries and lavish retreats. in our investigation last year, we learned of an insurance company leaves -- believes an insurance -- you are too risky, they will find an excuse to cancel your coverage. as executives told us, this practice will continue until there is national health care reform to expressly prohibited. in this case, we are reminded of this sad fact. an internal wellpoint document said that the practice of precision is a key issue for maintaining low medical loss

ratios. wellpoint has offered an alternative plan that does not cover the brand-name medication she requires to treat chronic condition. julie hendrickson is a single mother with children. wellpoint has proposed to raise premiums by 30%. one of her two sons was born with a hole when his heart and with a hole when his heart and required suno carrierringconnec0

the president and ceo of wellpoint. accompanying her is cynthia smith. i look forward to their testimony as to why wellpoint is raising their premiums. tomorrow, the white house will be discussing health care proposals. included in this proposal is language that grants the authority to regulate rate increases. this hearing could not come at a better time. it provides a reminder that unless congress and the administration act, americans across the country will continue to experience large premium incruses and will be priced out of the market. with little or no health care coverage, we are all just one injury or illness away from bankruptcy next, i would yield to the gentleman from texas and welcome him as the ranking

member. i look forward to working with them to route this congress. mr. burgess, your opening statement. >> thank you and the chairman for allowing us to have this hearing today. i want to thank the witnesses that traveled far. it is odd that you look around the room and you do not see the insurance commissioner of the state of california, which strikes me as odd in a hearing of this nature. if the reason for this hearing is to determine whether an insurance company has violated regulations, you would think about the head of the stake would be present and with us.

we have the california subsidiary in dispute in the evidence shows that anthem submitted, as required, there after world determinations as to why they needed decrease in premiums. the evidence also shows that the commissioner did nothing with the information they were given. they did not raise a single complaint for over four months. why the federal government is involved in a state issue, that presupposes that the line of thinking between national democrats and national republicans and the health-care debate have a single argument. republicans believe the insurance is a state issue. how many people get sick at one

time? the actuaries look at the marketplace and determined this ratio. of course, we are involved in this tremendous, tumultuous health care debate before the presidentñiñi remained that heah insurance reform. that is why the timing of this hearing could not be more coincidental. tomorrow, the president is holding a bipartisan photo opportunity on health insurance reform. ñrit is a significant photo opportunity. the department of health and human services has used this state biggest issue to increase support and it is another reason why we need a one or two trillion dollar health care package. in fact, the secretary of health

and human services should not make that much money. why does profit matter if the actuaries have done their work? i will agree. that is a huge, scary number. it may be irrelevant in this debate if the debate is on whether or not the business model of the insurance should be based on the actuaries. i will make no apologies for the insurance companies. they are certainly capable of defending themselves. i think that a report needs to be commissioned to study how insurance companies determine how much it will charge. if the numbers show that there will be a precipitous decline, any number, no matter how big, may turn out to be acceptable. if we are just focused on solving a dispute between california and anthem, who is right?

if and then is right, -- if and thumb --aanthem is right -- >> we need to ask if there is to reform in health industries as a whole. after months and months of debate, we have not figured out how to answer the question. how do we been the cost curve? we figured out how to bend it in the wrong direction -- how do we been that the cost curve -- how we been the cost curve? -- how do we bend the cost curve? maybe it is just because people are living longer and the cost

of an older generation whenever envisioned. the advancing complexity of what we are able to do is the very fact that we have more than one cholesterol lowering -- lowering medication is significant. what we can all agree on is that there needs to be reformed in the health and this -- in the health industry. and let's get rid of existing -- pre-existing conditions. how about improvements of people who are stopped so that they are not stuck with such a high premium. i could before that. we are going to turn our attention to the president's summit tomorrow. i hope that the president is interested in including good ideas, regardless of where they emanate. >> mr. waxman, thank you for being here. >> chairman, thank you for convening this important and timely hearing.

on february 4, the los angeles times reported that in some blue cross -- that and the blue cross -- anthem blue cross was doing this. our reporters have done excellent work on this issue. it brought to our attention all of this as well. by any measure, this was a breathtaking increase in health insurance costs. we are holding today's hearing to find out what is really driving these enormous rate increases. we are told that they are due to medical inflation. but the thousands of pages of

wellpoint documents that we have reviewed tell another story. they tell a story, not about costs, but about profits. not about increasing coverage, but about dealing with coverage. not about covering more people that have illnesses, but about cutting them off and seeking out new customers who are healthier and wealthier. the documents also tell a story of a potential premium rate increase still to come. wellpoint says that its rate increases have nothing to do with increasing company profits. but an internal company emails says that its rate increase would return california to çótarget profits of 7%. wellpoint says that its rate

increases are absolutely necessary but its internal company documents describe a plan to build a cushion to allow for negotiations. the company told its board of directors that its average would be 25%, but that its final rate increase would only be 20%. other documents raise the possibility that wellpoint may have manipulated the assumptions to keep the medical loss ratio a key measure. the documents that we have reviewed show that wellpoint is proposing its highest increase on its board. at the same time, it is actively developing new products called the downgrade options that reduce benefits for policyholders.

as we will hear, this purging process cuts coverage for wellpoint policyholders when they need it the most, when they get sick. the documents point to a future of even higher rate increases. wellpoint toll committee staff -- told committee staff that it held the increase at 39%. if wellpoint had not done this, some policyholders could have faced rate increases of over 200%. mr. chairman, we have circulated a memorandum and i know these are now part of the record. one question that we ask is where does all this money go. wellpoint paid 39 senior executives over $1 million cash. the company spent tens of millions of dollars more on

expensive corporate retreats. this was during 2007 and 2008. wellpoint spent $27 million on executive retreats. one retreat cost over $3 million. corporate executives at wellpoint are thriving. . .

. . . .

>> i look forward to ways we can work together to discuss rising healthcare costs.

>> let me ask this question. let me ask about well points, pleemyums. well points executives -- you asserted profits were not a motivating factor in raising increases in california. in written testimony, you indicated proofs were a reason companies were fighting the increase inçóñr premiums. please takqi a lookñi at tab 13 the average increase is 23% and isñr intended to returnñi california toñi añr profit of %

versus 5% this year. were you attempting to raise profits to 7% by increasing the premiums? sthat purpose behind this email?xdxdçóçóñióp,xdñiñrñiñir the emailxd says we got to get 7%ñiñi so weñi3wñiñrxdñi cançó

7.ñiñi the ratesñi weren'tñi foi'-xdñ medical claims continued to escalate more thanñi weñiçóñim9 anticipatedñiñrñiñrñixdñiñiñrñii çóñr anñi op gainliñrñiñr

jo by that combination. those earnings now. when you look at our total earnings of 2009 and look at our net margin, which is our appropriate measure. we were at 4.8%. >> that was your profit. that was 2.8.

that was a year everyone would consider a horrible year you had the hearing yesterday in california about the rate increase the anthem president defended saying 2.5 to 5% said that would be the figure. that would be beyond the range. it is reasonable in their appropriate profits. when your policy holders are taking a hit. you know, it's that group of basically self employed people, they are take 30-40-50% hit.

they have a profit. you have to have at least 2.5 to 5% profits. on a relevant stiff basis is very efficient. when you lock at that compared to others, boy owe tech companies are 23% profits. we have a chart describing that even community based hospitals

are in the 6.9% margin. we are part of the system driving to get to more affordable healthcare for our members. jo we are knocking off the profits beg paid for by the average american. bit end of the year, you still made 2.something billion. we serve 34 milliol americans + across the country. it's important for our business to be sustained to be there. we want to be solve ant as an organization and be able to continue to invest in ways in which we can get to a more a in 4)q) quality healthcare system. in the public option. you are kil,ing the average

>> i appreciate you all being i presume, you prepared some actual findings. actuequired ngs. to d=uáát rate filings. in addition, wed

within 30 days to the filing. we heard nothing from the state until christmas eve. we got answers to one of our products. we responded and heard nothing else from the department of insurance until the news broke of the rate increases.

>> you know what we've been doing. you knew this was go to be trouble. you know what else hammed on christmas eve. they passed a bill in the senate. you newt landscape in which you were entering, correct? >> did you make a judgment if this is the best time to do this? >> to address the issue many have brought up. our desire is to have more members. our goal is to continue to serve members and have more members. it's not easy, it's difficult to have to continue to raise rates. the process was under way. the rates had been file. >> i don't want to inter runt you but i'm going to run out of time. >> to have 18 where we talk about the rañiteçó increases

because of our participation in hippa, we did have in 2009 a $68.9 million loss when combined with the individual to combine the open market, our loss was combined with $10 million all together. >> they assumed we would have a march depin of about break eve ratesnwould have been in the 20's in terms of therallçó

average. we were concerned which is why we also capped the rate at the top end. we did not want rates for individuals to go in excess of that cap. >> do you have doctors raising their rates in your network? my experience with most insurance companies was we took what you gave us. is california substantially different from texas? >> we can talk about the figs trend and the hospital trend. >> the hospital trend and pharm suit cal trend is a much bigger

driver. it's not the biggest driver in your book of business. jo we think the figs trend is around 6%. the hospital trend is 10 and the pharmacy trend is 13. >> all of the scombendturs do flow through the physician the patient doesn't get the treatment unless they write the script. they tend to be a driver or constructor of costs i always wonder why we try to ratchet down the figs paymentsñixdñiñm/ ever looked at a corporate level that maybe if we paid

doctors differently? >> absolutely. we thit partnership with doctors is key, so we are paying for outcomes >> you know there's a representative to look at different ways to rei am bruse the evidence based medicine for

those tests that may be used. jo we really are going to talk about tort reform. >> thank you. mr. chairman. >> thank you very much california has a tort reform california has a tort reform law.c

you needed 25% but you were willing to go to 20%. the presentation outlined or"qleptled key assumption, individual pricing distinguishing between your

rate ask and your rate increase, you are assuming for 2010. the rate ask is listed as 25% to 26% but the assumed 20% increase is just 20%. this seems to say you were asking for a 25% increase but expected to see that rate association. that seems like padding. how did you respond? >> i'll respond to that. it's important to note that this was prepared before the rate filing. it recognized the reality that departments of insurance have political pressures and often will change rates in response to those pressures. medical costs continued to escalate through the lateral ports of 2009 rate increases

became necessaryçó you were prepared to ask for a rate higher than what you needed as a negotiating tool. you could have anticipated rates were going to go up. you hadñi to make a decision yo were really looking at ançó average increase of 20%. you can see the document assumes two month increase. 6 c1 assumes two month increase. this says the same thing. says you are asking for more than you need because you built in a large curebon. here is what i think is going on. you are trying to squeeze every dollar you can out of policy holders in california and across the nation at a time when families are struggling to pay their bills, you are charging a rate that pads your

profits and supports the salaries, the trips and retreats and everything else >> we have described thatçó inñ 2009 in the individual business in california mbings our prices were not adequate so to cover the losses in the issue part of the product required to be covered. we had a lot -- had a loss. our prices were reviewed and evaluated confirming coming in specifically at our requests is the biggest efficiency youçó produced trying to shift people to plans? >> no. we could be making less money when those members shift to profts withçó less benefits all

three seemed to be told they were going to get a 39% increase. but they were in luck, they could get a plan that would cost less, they have to pay more out of pocket for their drugs or they have to come up with greater, higher is that efficient? jo we try to make sure a custody can get access to a product they want and afford. >> they would like to have what they have beenñi paying for. healthy, younger individuals leave and we have people stay that are more expensive.

the cost continues to go up. >> if you are pooling people together, you don't need these individual risk analyses because you are spreading the costs. jo we are an advocate that will clue the preexisting mechanism. >> that's what the bill does that passed the house what the insurance market seems to be doing is if you've got the illness, you wouldn't even be considered for consideration

they have to pay what you ask or drop down to something else. what happened is that the effectiveness of keeping someone in the pool really fell apart. the great concern is you wouldn't keep everyone in the pool, you wouldn't have the right mechanisms in place >> you would make sure you have a continuous requirement >> somebody says i don't want insurance, what would you do? there should be an enforceable penalty that catches all

individuals and a requirement to have continueous coverage. people jump in and out of coverage where there is a mandate. >> their costs continue to escalate for the costs. >> i have gone way beyond my time. thank you, mr. chairman. >> questions, please? >> on adding to the record or letter that she wrote february 11 to angela braley. can i have consent? >> in the letter that the

representative wrote, she quotes from your anthem blue cross unit in an email message urging your employees to oppose healthcare reform an it is reported to have said proposals to have caused tens of millions of americans to loose their private coverage. she makes the point that the 39% rate increase flies in the case of the concern for those who would supposedly loose coverage. as a result, that combined with some other changes proposed including changing the age

rating. our analysis which we shared and have available on our website we found individuals young individuals would see an excess of 106% rate increase that was beforeñrçó trend >> you depan by talking about how happy you are to be here. i want to remind you the name of this hearing. it's premium increases by anthem blue cross. what i expected was not for to you lecture us about what we wo should put in our bill but to

explain to us or answer some of the concerns, i don't know if you were here for the testimony of jeremy arnold whñiz talks about a whopping 74% increase that he has experienced.w3 just calculatedxd pays $24,000 5050ñi a year, you are saying y never even met the deductible. you paid this amount but really didn't get any benefit from the health insurance because you didn't meet the deductible or you would, becçóause she xdwf)ñ you letters talking about how she realized for months she had been paying for a costly, unnecessary benefit, switched plans and finally did get a

letter that her premiums were going to be raised to 38% although she could switch to a lesser coverage and pay 16%. isn't that fabulous. i want to till you something. i think that a 39% rate increase at a time when americans are losing their job, losing their healthcare is so inyesterdayiblely audienceation and irresponsible. we see this lavish retreat places i don't know how many people it was said make $1

million a year. >> how much money do you make? >> my salary is $1.1 million. last year an annual incentive payment of $73,000. >> it makes sense that you would need a rate increase now this you've told us that. i want to know can you name any california competitors that have raised their rates? >> the individual market, there are products available. lower prçóicedñiçóxdxdñrçó cas

>> we are ay an efficient company on a relative basis. we have competitive rates. many times they are less expensive. if i could address your earlier question? >> no. i have another question. has your company met the legal requirement of 70% of premiums collected in the medical claims

the losses are born in that marketplace as well. in the end it would produce an after tax return. there are some very important reasons to make sure you price the products when you have a company providing healthcare, it might make sense to look across the whole company. people in the individual market are often least able to be able to come up with these high rates. what would you think about an

80-85% medical loss ratio. >> we in some states where there has been regulation to restrict the ability to raise rates, we are blue cross, blue sheild. we are blure cross. we are geography. we are geography. we don't want to leave the individual market as they incur healthcare costs, we are there to provide and care for their costs. >> i field back. nothing to yield. >> thank you very much we had

some rate increases and premiums being raised 38%. the third had a rate increase of 38%. trying to get a much less comprehensive policy. i'd like to show you and ms. miller a document that indicates these rate increases could be much higher in the future. you can find the chart in seven of the document binder. this is a well-point internal analysis of the rate increases determined as part of the pricing memo providing recommendations and analysis.

i'd like to put this document on the screen. >> number one appears to propose that well point make no change in rate increase caps. right? >> that's correct. it appears that the possibility of removing the rate increase all together it states remove

saf completely taking away the rate caps and removing them entirely. >> i don't seat number of policy holders you are looking atçó i could be receiving a 22s right. >> when we do our work this would have been the starting

point. we did cap the rates. it was not a proposal. it was in order to illustrate how dramatic it would be increased. >>çóñi it is a viable marketpla requiring you to raiseñrçó my ñ headed. marketplaceñiñiñr they areñi tr hang on to the jobs andçó healt benefits >> is that sustainable?

>> absolutely not.ñrçóñi >> that's pretty selfñi serving just years ago, the range was in 35%. it's a business model working for you as an insurancer it's coming at great expense to other peopleçó we have 2500 nurses -- >> ñ3 didn't mean to interrupt. we have a situation here that your own internal abal sister suggests the conclusion. it's not sustainable.

what you would have to charge in order to main continue. if that requires solving that tool company. that's not a market that is viable to anybody on the receiving end of thatx÷÷ñiñiñrñ issues extremely in terms of r the rate increases. >> basically, you are in agreement with the proposition i just made that the current model is fundamentally broken where premiums are going up

220%. >> i think we need to continue tolsñ createléañi] an opportuni bothñi consumers to be better e% dh dynamics as well as ñikoñs2 we fundamental change the reimbursement we do work to make sure they can get another product this they can afford or not the benefit that's they don't want and need >> finish it up. the point has been made. >> thanks for being here today. jo thank you.

it's an honor to be with your subcommittee. i see a company of the members of the previous panel. i want to say thank you for being such wonderful witnesses. you spoke for a lot of my constituents. i had to leave so i wouldn't able to say that to you here's a story in a quote. >> we received a notice that our health insurance premium will increase by 30% starting march 1. my husband and i are currently

self employed. we currently have a 5% -- $5,000 deductible. if anything happens to our health, we loose everything. >> i just received notice of a rate increase from $616 a month to $881 a month. another says this, the premium on my anthem blue cross policy is going up from $5 5 to $712 as of march 1. i want to you be aware, she writes of this 30% hike in insurance rate i know that you

have -- i'm well aware anthem has been fined for doing that in years past. knowing that it may well drop me as a consumer who in the event i bnl sick is certainlyly not an attractive enticementxd for me.

>> thank you. when we negotiate with hospitals in south california, our goal is to have zero ineeses. often they come requesting a 40% increase. if there is not competition, the regulators have said it is inapopet for us to determine those hospitals from the network. as a result, we don't have the ability to not agree to those very high rate increases from the hospital.çóñr we are going to make sure that the healthcare they are receiving is affordable and high quality.%i it's one we keep doing and why we hold the pharmacy benefit so we could get access to lower cost drugs.

>> you are shifting the blame to the hospitals? there is nothing you can find plaws with in your own system. jo we continue toñr improve as organization while we provide more services in terms of getting to that underlying healthcare cost. we will continue to do that. >> i'm going to again address the topic that has come up show places you hold your retreat. because iñjñ's so visible, its pretty galling for people when have had to sacrifice their vacations because of the $mp çóhave ñytontinued to make these retreats a part of your working relationship and offering to employees. quon assumers are making

sacrifices in order to hold on to their health insurance as theseñr retreats hold more sway with your company. i will allow youçóçó any time i have left >> those meetings have been characterized as retreats. that is incorrect. thoseaoare meetings we have wi our customers. >> which customers? jo i meet quarterly with representatives for our customers, the advisory group. >> who are those people? >> they are representatives from our customers, xdbusiiness ä ç=a1jr!uy the benefits on behalf. >> you are selling those benefits at those lavish reports. jo we are meeting with brokers and agents >>. that's where her agent was when she was trying to get ahold 3

her. we make sure our agents and brokers know what our benefits are and what plans and services we can provide to them. >> you justify that cost as you are raising the premium? >> no. we continue to focus on making sure we are more efficient.çó >> do you ever meet with your premium holders? >> i do. i like to. >> we are on their side. >> they zont feel like it. >> there's so much misinformation about what is driving these premium increases.

>> there was a questionerlier for a letter be entered into the record. second round of questions. >> thank you, you said it a couple of times you want to make healthcare services. you want to provide more services and provide more efficient services and good services for them sthafment what you have been saying? you see that as your role? >> we soo that as a critical role.

some of these documents create a different picture. >> there's a document called well point individual 2010 plan opportunities not reflected in the forecast. it's a business plan. there's a session called risk management. you have a number of initiatives. one is to take preexisting waiting periods and adjust them to be either 12 months or the legal maximum less. you have to wait if they have a preexisting condition to wait as long as the maximum will allow. secondly, reinstatements will only be allowed for a period of 60 days after termination and

will require a repayment of back premiums. >> does well point have initiative for the amount used for medical claims? >> how about to reduce not just medical cost by services? >> we want to make sure our members get access to the quality care they need at the right setting at the right time. if we are avoiding an unnecessary expense.

>> if you are going to reduce payment for claims, you are reducing payment for legitimate medical services >> we are trying to make sure that the pool of members we have is not disadvantaged in the marketplace. one reason that our rates are going up is that healthy people are making the choice when faced with the hardship --

. >> what does a medical loss ratio? >> it's the climbs paid divided by the premium. were you trying to reduce the amount of claims you are paid for the people. making sure you are still within the medical loss ratio. isn't that right? the ways you do that is to deny people care. that sounds like you want to make sure that you've got less money go into paying for care.

>> the reason you have a medical loss ratio, we wan to insurance theñiñr preñrmiums ari >> it suáunds like people were looking dit thñrex:ñstrategies potentially reduce the cost of the overall pool.ñiñrñiñr

that individual will have to go without or pay for the services you would otherwise pay for. >> if an individual doesn't buy his or her policy when they are well.ñiñrçóçóñrñiñi >> ñâr[ñyou'ñiveñiçúgñiotñi pe then you wa(5"uz shift more costs çóon to them and use more instead of for servicesñi jo wh

in the bill, do we have? we have 80% requirement that the money collected be used to pay forñi health insurance you are at 85%. you don't ñido that now, do you? >> i want to address that question too. when every administrative dollar we spend, we want to produce a lower cost of care as a result of that. we make investments >> you produce a certain amount to meet the ratio and to make sure you are meeting your expenses and profits. people are being deneed care. that's why health insurance reform is so necessary. i dispute your statement this this bill does not bring more people into the pool.

an individual has no pow tore deal with you. if they are pulled together, then those people have a better collect pays ñiour healthcareçó claims, not moq8e money going retreats and expenses and thank you.ñiñiñiçóçóçóñiñ.'ñikz >> can wçóeñrçóñqrñiçó wilañogj site, thñiey e not yourñiñi bi ally orphan, they ñrreportedñiñ federal loss ratio ñiatxd çp4. right atñ@óthaeçóçó 85% figur mandated inxd tñxe çóbill.ñiñr

jo there are manyñi products. they tweeted it, so i know it is right. >> let me ask you açó a questio i thought blue cross was jáurofit. >> there are many companies who have blue cross licenses. we are a for profit companies. the not for profit companies have profits in excess of ours. >> one of the areas where i you agree with him is that we need a mandate, an enforceable mandate in this

healthcare bill. the free society >> we have a tremendous mandate all over to pay your income tax. jo yet we ask honest people to give up significant freedoms when we did the medicare part d program several years ago. part of my job was to go out and talk to people about the changes coming to medicare. i can't tell you the number of people who would say you can't make me take that prescription drug benefit. no. it's thro if you want it.

they said, you can't make me take it. you can't make me take it. what are you doing right now. i don't have drug coverage. you can keep it. you can keep that non-coverage as long as you want. there was a penalty involved. if you didn't sign up in the open enrollment period. people would pay a 10% premium