Big Insurance: “Recession? What recession?”
Thursday, February 18, 2010
You thought the economy was horrible in 2009? Then you must not work for Big Insurance.
A group called Health Care for America Now (HCAN) looked at the financial reports of the five largest U.S. health insurance companies and found their combined profit rose 56% in 2009. According to HCAN’s report, the five companies involved had a combined profit of almost $12.2 billion, compared to about $7.8 billion in 2008. Here’s the breakdown:
A Wall Street Journal story reports $2.2 billion of WellPoint‘s profits came from the one-time sale of a subsidiary. Even without that, WellPoint’s profits rose in 2009…and even with billions of dollars in profits, the company has proposed raising rates for its Anthem Blue Cross subscribers in California by as much as 39%.
The Journal item references above makes the point that “Anthem lost $58 million in California on its post-Cobra customers in 2009.” Cobra is a federal rule that allows the unemployed to keep their job-related health benefits for up to 36 months; California bars insurers from dropping customers after they have exhausted Cobra and caps what those customers can be charged.
According to the Journal:
If WellPoint didn’t raise premiums amid these losses, it would soon be under assault from its shareholders, if not out of business.
After all, that $58 million was 1.2% of WellPoint’s 2009 profits. Remember, there was only $4.7 billion in profit remaining after shareholders swallowed that loss.
Don’t spend any time crying for the one company that saw its profits decline in 2009, Aetna…they still managed to make more than $1.2 billion in profit. In the words of the report:
The outsize 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.
HCAN found the insurers increased profits while simultaneously insuring 2.7 million fewer people through private insurance. The report claims that is “part of the industry’s long-term shifting of responsibility for the care of millions of sick, older or lower-income customers to taxpayer-supported government health programs…State and federal programs have increasingly been hiring big insurers to manage their care.”
One other tidbit from the HCAN report: the five insurers, who collectively had almost 29% of the private health insurance market in 2009, combined to spend $16.8 million to lobby against comprehensive national health care reform proposals last year. And why would they want anything to change? It certainly ain’t broke for them and thus doesn’t need fixing from their point of view.