Texas Governor Rules Against HEB – Profits Deemed “Excessive”

Texas governor Rick Perry issued an executive order this morning denying HEB’s request to raise the price of a gallon of milk. HEB’s rate hike request  would have increased the grocery giant’s profit margin to a net 3%.

In a statement released this morning, Governor Perry, who switched party affiliation from Republican to Democrat recently, noted  “HEB’s unfair rate hike request would have hurt struggling fellow Texans who are trying to make ends meet. This has been another example of Big Grocery Store Chains taking advantage of our citizens.”

Governor Perry approved a profit margin of 1%. Texas Chapter of ACORN  President Sarah Palin applauded the order. “Rick Perry deserves credit for stopping greedy big business from gouging our voter base with higher cost food to be charged through the Lone Star “free food” program funded by people who actually work for a living,”

HEB spokesman, Duane Chapman, responded “We cannot survive financially on a 1% profit margin. We are considering a move to Communist China where capitalism thrives on supply and demand. We hope our customers will follow us.”

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In a case with potential national implications, Maine’s highest court unanimously ruled that state regulators were justified to deny Anthem Health Plans of Maine’s proposed rate hike for individual health plans.

The Maine Supreme Judicial Court in its 7-0 ruling found that Insurance Superintendent Mila Kofman “properly balanced the competing interests” when she reduced Anthem’s 9.7 percent proposed rate hike to 5.2 percent, Kaiser Health News reported.

Anthem, which sought a 3 percent profit margin, claimed the superintendent’s decision, which amounted to only a 1 percent profit margin, violated state law and the U.S. Constitution by depriving the company of a “fair and reasonable return,” according to Bangor Daily News.  

Maine law stipulates that premium increases can’t be excessive, inadequate or unfairly discriminatory, but the court said the law “is devoid of any language suggesting that the Superintendent must consider an insurer’s profit in approving rates for individual health insurance products,” CNBC reported.

In response to the ruling, Wellpoint, Anthem’s parent company, said the company hasn’t decided what it will do next. “We stand by our position that filed rates need to both cover the medical costs for our members and allow for an adequate risk margin to cover unanticipated costs,” spokeswoman Kristin Binns told Kaiser Health News.