Insurance News

How Much Is Enough?: America’s Biggest Health Insurers Post Huge Profits, Seek More

Posted on: February 17, 2010

If health insurers are hoping to keep Washington out of their industry, they’re going about it in a strange way.

A new report by health care activists shows that the nation’s five largest health insurers covered fewer people last year and still piled up combined profits that were 56 percent higher than the previous year. This is what prompts governments to regulate.

The soaring cost of health care is threatening to drive the American economy into the ground. Businesses are struggling to maintain health insurance as an employee benefit. Health care accounted for 16.6 percent of gross domestic product in 2008 — far higher than any other country — and is expected to reach 20 percent before long.

Yet, somehow, the country’s big for-profit insurers — WellPoint, UnitedHealth Group, Cigna Corp., Aetna and Humana — are racking up profit growth that can only be called obscene and that practically begs Washington to intervene. There may be drawbacks to a government health insurance program, but they can hardly be worse than a system whose inevitable consequence will be to deprive growing numbers of Americans of health care.

President Obama is already making hay of this issue. WellPoint is planning a 39 percent increase in premiums for some of its California customers — that’s more than 14 times the rate of inflation in 2009. WellPoint blames it on the recession, but ask retailers what happened to their prices during the recession. The cost of a plasma TV didn’t go up by 39 percent. The price of gasoline collapsed and has remained below $3 a gallon.

To be fair, it should be pointed out that the big firms aren’t a major factor in Western New York. None of this region’s dominant health insurers — HealthNow, Independent Health and Univera — have reported 2009 earnings yet, but they are much smaller insurers and are locally based nonprofits, which tend to have much lower profits and profit margins than publicly traded companies owned by shareholders.

Nationwide, though, it will be surprising if Obama doesn’t gain political ground regarding health reform, given these kinds of headlines. That’s a mixed blessing, since neither the president nor Congress has focused enough attention on controlling the costs of health care, which must be the first order of business.

But, as these insurers have helpfully demonstrated, health reform remains an urgent matter. It can’t be swept under the rug for another 15 years, while ever-more Americans lose their access to medical care and costs threaten to overtake us.

This is a moment for Obama and all lawmakers who understand the problems facing Americans to renew their efforts to produce real and responsible health care reform, starting with the overriding problem of cost. WellPoint and its peers have given them the ammunition. They need to use it.

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