The Seminal � Report: Insurers enjoy record-breaking profits as they cut 2.7 million people from their rolls

The Seminal � Report: Insurers enjoy record-breaking profits as they cut 2.7 million people from their rolls

Health Care for America Now has a new report out today on the insurance industry’s profits and customer base [pdf] and the statistics are shocking:

The five largest U.S. health insurance companies sailed through the worst economic downturn since the Great Depression to set new industry profit records in 2009, a feat accomplished by leaving behind 2.7 million americans who had been inprivate health plans. For customers who kept their benefits, the insurers raised rates and cost-sharing,and cut the share of premiums spent on medical care. Executives and shareholders of the five biggest for-profit health insurers, UnitedHealthGroup inc., WellPoint inc., Aetna Inc., Humana Inc., and Cigna Corp., enjoyed combined profit of $12.2 billion in 2009, up 56 percent from the previous year. It was the best year ever for Big Insurance.

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The 2009 financial reports from the nation’s five largest insurance companies reveal that:

• The firms made $12.2 billion, an increase of $4.4 billion, or 56 percent, from 2008.
  • Four out of the five companies saw earnings increases, with CIGNA’s profits jumping 346 percent.
• The companies provided private insurance coverage to 2.7 million fewer people than the year before.
  • Four out of the five companies insured fewer people through private coverage. UnitedHealth alone insured 1.7 million fewer people through employer-based or individual coverage.
  • All but one of the five companies increased the number of people they covered through public insurance programs (Medicaid, CHIP and Medicare). UnitedHealth added 680,000 people in public plans.
• The proportion of premium dollars spent on health care expenses went down for three of the five firms, with higher proportions going to administrative expenses and profits.

The numbers may be shocking, but they shouldn’t be surprising. This is how the industry makes money, by charging people more and cutting the unprofitable people from their rolls. In fact, the one company who’s profit margin went down slightly this year – Aetna – was also the only company to add more customers to its rolls in 2009.

But the industry will go to any length to "justify" their profits and their policies of dropping their sick or expensive customers.

First, they’ll claim that the cost of medical care is going up, and so they need to raise prices, but it’s simply not true. As Congresswoman Rose DeLaura (D-CT) pointed out on a call with reporters announcing this report:

They’ll say the increases are justified because medical care is going up, and they’ll hide behind their actuaries to explain their rate increases. But this is coming from the same people who’ve been saying health insurance reform will increase costs. They can’t have it both ways.

She’s absolutely right. Insurance costs are skyrocketing now. Double-digit rate increases like those announced from Anthem in California have been common for years, and will continue to be "commonplace" if we don’t reform our health care system, according to Richard Kirsch, Health Care for America Now’s National Campaign Director. And yet, while raising their rates, insurers claim health reform will increase prices. It seems there’s only one way prices can go in according to the insurance industry – up. ...