Report: Government Spending Is Increasing Health Insurer Profits

Sarah Kliff points out that the government’s growing reliance on private health insurers to manage Medicare and Medicaid has led to “a pretty stellar financial year” for the industry. According to a new Bloomberg Government study, “returns on investments have surged ahead of general stock indexes and, as the above chart shows, anyone who invested $1 in health plans back in October 2008 has seen that grow to about $1.70”:

Those profits will likely continue to grow as more Americans acquire health insurance as a result of the mandate in the Affordable Care Act. A July 2010 report from PricewaterhouseCoopers concluded that the law’s state-based health care exchanges provide private insurers with a lucrative new market in which they stand to gain up to $200 billion in revenue by 2019, despite some of the provisions designed to curb industry gains.


Insurers, in other words, will continue relying on government for its growing revenues, while lobbying for the repeal of health reform’s taxes and paying its congressional allies to pretend that any additional government regulation of the industry will eliminate the private insurers altogether.