Profits Versus People
As the nation stalls on health care reform, including the debate on just how much the insurance industry needs to reform, comes word that the five largest health insurance companies racked up record profits last year - $12.2 billion – up 56 percent over 2008 numbers.
The numbers come from the 2009 financial reports filed with the Securities and Exchange Commission and were prepared by Health Care for America Now, which represents more than 1,000 organizations, including labor unions.
Based on the numbers, insurers WellPoint, United Health Group, Cigna, Aetna and Humana offered coverage to 2.7 million fewer people than before.
And three of the five insurers cut the amount of each premium dollar they spend on medical care for their customers, diverting more to salaries, administrative expenses and profits.
The insurance industry lobby, America’s Health Insurance Plans, criticized the report’s approach.
2008 was a bad year financially skewing the 2009 comparison, reports McClatchy News.
"It is disingenuous to look at the profits at one company today compared to where it was in the depth of a recession," said Robert Zirkelbach, a spokesman for AHIP.
Fuel To The Fire
Adding fuel to the fire, in California Thursday, Anthem Blue Cross, a subsidiary of WellPoint, announced its decision to raise premiums for some individual health policies by as much as 39 percent.
WellPoint defended the rate increase to Health and Human Services Secretary Kathleen Sebelius in a letter Thursday, saying the rising rates reflect rising medical costs. WellPoint, based in Indianapolis, posted a profit of more than $4.7 billion in 2009, but says Anthem’s individual business lost money in California in 2009.
Sebelius said "it remains difficult to understand how a company that made $2.7 billion in the last quarter of 2009 alone can justify massive increases that will leave consumers with nothing but bad options: pay more for coverage, cut back on benefits or join the ranks of the uninsured.”
A congressional committee is asking for more information on the increases and wants WellPoint CEO Angela Braley to speak at a hearing February 24.
With a weaker economy, many premium holders switched to lower cost insurance options. Still, WellPoint's profit margin at 7.3 percent is among the highest of the big five insurers, with 3.4 percent profit for Louisville, KY.-based Humana, to 7.1 percent for Cigna.
All but one big insurance company reportedly lost customers while they recorded record profits – WellPoint leaving 1.4 million behind, and Cigna losing 639,000 people. Aetna was the only company whose profits decreased in 2008 while it gained an additional 1.2 million new customers.
Industry analyst Sheryl Skolnick, a senior vice president at CRT Capital Group, said many of the insurance companies are driven to increase prices for their products to satisfy investors.
"It is a terrible thing to run your business for Wall Street," Skolnick said. #