Oppenheimer analyst Carl McDonald reacting to the furor surrounding WellPoint’s profits and planned rate increases:
I would like to be the first to express my complete and utter outrage at Kraft Foods. While hardworking Americans are suffering from the worst economy in a generation, Kraft Foods reported 2009 net income in excess of $3 billion, and an operating income margin of 13.7%. Clearly, there is no more basic a human need than food, and yet this company had no problem paying its CEO almost $17 million in 2008. I can feel the excruciating pain of so many people across the country that are having a difficult time putting a decent dinner on the table each night, and we need to work together to stop the abusive price increases this company is perpetrating on the American people.
I demand that the federal government immediately establish a Committee on Food Prices to set the appropriate amount that Kraft can charge for Oreo cookies, Oscar Mayer wieners, and Philadelphia cream cheese. It doesn’t matter to me that the price of sugar, milk, and whatever it is that actually goes into a wiener are increasing; we need to end the gouging that consumers endure every day….
The paragraphs above are satire. I’m actually a big Kraft Foods fan. Almost everything above is something that either a Senator or Representative has said over the past few weeks about a managed care company (mostly WellPoint) or the industry generally. It highlights the inherent unfairness of singling out a specific company like WellPoint ($2.7 billion in profits and margin of less than 5%) versus almost any company in the S&P 500, like Kraft ($3.0 billion in profits and a margin in excess of 13%).
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