Over the last several months, I’ve noted that even while the economy is in recession and a growing number of Americans are going without health insurance coverage, the big health insurers are posting higher profits. Americans are actually using less care — filing fewer claims — but still paying more in premiums.
Wellpoint, the nation’s largest insurer by membership, “reported a 4% increase in profit for the second quarter that helped generate earnings of $1.6 billion since the beginning of the year – a 26% increase over the same period in 2009,″ and Aetna said its “second-quarter profits rose 42 percent, with a net income of $491 million, compared with $346.6 million for the same quarter last year.” Earlier this week, HCAN released a report which found that CEOs from the 10 largest for-profit health insurance companies “collected pay of $228.1 million, up from $85.5 million in 2008.” Collectively, that’s a “167 percent raise,” while “Americans saw their averages wages increase by about 2 percent.”
Insurers are spending less on health care and seeing higher profits:
Despite these riches, the industry is still lobbying regulators to soften the medical loss ratio reporting requirements and other mandates that are part of health care law. For instance, the Hill’s Healthwatch reports that lobbyists are using the August recess to lobby lawmakers “for greater flexibility” to avoid the stringent grandfathering regulations that exempt certain plans from reform’s new consumer protections. They’re pressing for rules that would allow the insurance industry to reclassify administrative expenses as medical spending and are now wrangling with regulators over “which tax payments can be deducted” from the revenue part of the medical loss ratio.
Insurers are spending millions in premium dollars to lobby for regulations that would protect their profits and argue that they could be subject to future economic woes. But the industry’s financial prowess (their incredible profits) implies that issuers can withstand fairly stringent medical loss ratio reporting requirements and afford to charge smaller premiums. That’s something regulators should remember as they’re being lobbied by insurers.