Health Insurers Post Record Profits
Insurance firms rake in profits as they cut patients, an advocacy group says.
Feb. 12, 2010— -- In the midst of a deep economic recession, America's health insurance companies increased their profits by 56 percent in 2009, a year that saw 2.7 million people lose their private coverage.
The nation's five largest for-profit insurers closed 2009 with a combined profit of $12.2 billion, according to a report by the advocacy group Health Care for American Now (HCAN).
"The outsized earnings are a vivid reminder that without comprehensive national health care reform, the gatekeepers of our broken health insurance system always will put the short-term interests of Wall Street before the needs of millions of patients and a national economy plagued by joblessness," the report said.
A spokesman for the nation's health insurers said their profits are reasonable and represent only a small part overall increase in health insurance costs.
The HCAN report attributed this year's profits largely to insurers' dropping coverage of 2.7 million people, who then moved onto public insurance plans such as Medicaid.
Under questioning from reporters, Richard Kirsch, national campaign manager for HCAN, conceded that insurance companies don't bear all the blame for eliminating people from their rolls. He said the recession induced many employers to cut back on benefits, including health plans. Also, many who were laid off lost their insurance coverage and were forced to enroll in Medicaid.
Even so, insurance companies have also offloaded their most expensive patients by cancelling their policies and raising premiums drastically, Kirsch asserted in a Thursday press call.
Among the report's findings on specific insurance companies:
Wellpoint increased profits 91 percent from 2008 while it chopped 3.9 percent of its total enrollment.
United Health's profit increased 28 percent from 2008, while enrollment dropped by 3.4 percent.
Cigna's profit increased 346 percent and enrollment dropped 5.5 percent.
Humana's profit increased by 61 percent while enrollment decreased by 1.7 percent.
Aetna was the only company with a drop in profit and a gain in enrollment. The company's profit declined by 8 percent from 2008, and enrollment grew by 7 percent.
Lawmakers and critics who took part in the HCAN call said they were disgusted by the notion of insurance companies profiting while unemployment rates soar and more than 40 million people lack health insurance.
"How did they accomplish this feat in the midst of a sharp economic downturn that reduced wealth across the board?" asked Rep. Rosa DeLauro (D-Conn.). "Easy. They delayed payments to doctors, hospitals, patients. They raised premiums, increased co-pays and deductibles."
California's largest insurer, Blue Cross, announced last week that it will raise premiums 30 percent to 39 percent for many of its 800,000 customers.
"Without reform, we're going to continue to see double-digit rate increases," Kirsch said. "Without requiring that everyone's covered, without regulating insurance companies, and without subsidies for people to make it more affordable, the data this year will continue unabated," Kirsch said.
The health care bills being considered in Congress would impose regulations on insurance companies, prohibiting them from denying insurance or cancelling policies based on a pre-existing health condition. Both bills would also require insurance companies to spend money from premiums on health care, not on administrative costs.
Insurance companies agreed to the deal because of a provision that would require most Americans to buy health insurance, which would increase their customer base.
Some say the health care reform movement stalled with the election of Republican Scott Brown to Sen. Edward Kennedy's old Massachusetts Senate seat, and President Barack Obama is holding a televised health care summit on Feb. 25 in hopes of bringing Republicans and Democrats together on some kind of agreement.
A spokesman for the insurance industry said health insurance profits "are well below other industries in the health care sector."
"For every dollar spent on health care in America, less than one penny goes towards health plan profits," said Robert Zirkelbach, spokesman for America's Health Insurance Plans (AHIP). He argued that in 2009, it was spending on hospitals, physicians and prescription drugs that "continued to soar."
Indeed, a recent report by the Centers for Medicare and Medicaid Service (CMS) found that health spending grew 5.7 percent, reaching $2.5 trillion in 2009, even though the overall economy declined by 1 percent. The report pointed to increased spending on hospitals, doctors, and medications as major drivers in the rising cost of health care.