Play Live Radio
Next Up:
0:00
0:00
0:00 0:00
Available On Air Stations

Bill Knight - November 17

http://stream.publicbroadcasting.net/production/mp3/wium/local-wium-994004.mp3

Macomb, IL – Patients increasingly - still - seem like collateral damage in an archaic health-care system where profits are put ahead of people by powerful financial interests.

Profits at big for-profit health insurers are booming, according to the US Securities and Exchange Commission and the National Association of Insurance Commissioners, and even non-profits are reporting sizable gains since 2010.

Melinda Gibson of Health Care for America Now (HCAN), a health care advocacy organization, says, "Customers continued to cut back on doctor and hospital visits in a slowing economy, [but] record-breaking profits show that the health insurers continue to foist excessive and unjustified rate hikes on families and small businesses."

According to the industry's own financial data analyzed by HCAN, for-profit health insurers took $7 billion in profits in the first half of 2011 by charging more and spending less - on patient care.

HCAN director Ethan Rome says, "While America's families and businesses are struggling in a tough economy, insurance companies are racking up unconscionable profits. Premiums have gone up 131% since 1999."

The five largest for-profit health companies, their second quarter profits (and the percentage change from the second quarter last year) are: Aetna, $536 million (up 9%), Cigna, $408 million (up 38%), Humana, $460 million (up 35%), UnitedHealth Group, $1.2 billion (up 12%), and WellPoint, $701 million (down 2%),

Combined profits for the five, which together cover one-third of the US population, surged 13% to $3.4 billion in the second quarter. If that trend holds, the five companies will take a record $14 billion in profits this year.

The insurance industry claims to have a low average profit margin of 4.4%, but so far in 2011, Aetna has reported a health-care profit margin of 11%, and Cigna, WellPoint and UnitedHealth are more than 7%.

In Illinois, Blue Cross/Blue Shield (Health Care Service Corp.) has more than 12 million members here and in New Mexico, Oklahoma and Texas, making it the country's largest "customer-owned" health insurer. With its affiliates, Blue Cross/Blue Shield is the nation's fourth largest health insurer overall, and its second quarter this year also showed dramatic improvement from 2010, with net income up from a loss of $7 million to a loss of $825,000 - a $7 million turnaround.

Its net capital improved from a loss of $5 million to a gain of $9 million - a $14 million swing. Further, Blue Cross/Blue Shield's "net cash from operations" was up from a loss of $10 million a year ago to a gain of $10 million this year, a $20 million improvement.

HCAN's Gibson adds, "Insurers defend their increasing wealth by saying their profits represent less than one penny of every dollar of national health spending, but that's deceptive. One penny of every health care dollar amounts to $347 billion over the [next] 10 years, according to government projections."

Besides hard-to-justify high premiums, health insurers are spending less on patient care.

Gibson continues, "Aetna led the industry in finding ways to avoid covering actual health care by shifting medical costs to working families and employers through skimpier coverage and higher deductibles. As a result, the share of premiums Aetna spent in the first quarter on medical care (known as its Medical-Loss Ratio' [MLR]) [was] down two percentage points from a year earlier."

The minimum MLR is 80 percent for individual and small groups and 85 percent for large groups. Of the five for-profit and Blue Cross/Blue Shield only WellPoint's MLR meets the minimum.

A consumer protection provision in the Affordable Care Act sets that minimum on patient care - instead of profits, CEO salaries, and so on - and companies that fall short must rebate the difference to consumers starting next year. The Department of Health and Human Services estimates that insurers could owe up to 9 million customers more than $1 billion next year.

HCAN's Rome reminds us that, "Americans are struggling to find work, hold onto their homes and provide for their families."

But health insurers are spending less on patients, making more money, and maybe piling up extra cash before those mandated refunds take effect - or hoping conservatives will convince Americans to vote against their own interests and elect people to repeal health care reform.

Will Americans be able to stand up to the profitable, powerful insurance lobby?

Bill Knight is a freelance writer who teaches at Western Illinois University. The opinions expressed are not necessarily those of WIU or Tri States Public Radio.