Health Industry: Shameless Profit-Making at Consumer Expense

While the country debated health care reform in the first quarter of 2010, the nation’s five biggest insurance companies saw their profits soar, raised consumers’ premiums, offered fewer benefits and lost 2.8 million customers, mostly because consumers could no longer afford their plans, according to a new report from Health Care for America Now (HCAN).

WellPoint Inc., UnitedHealth Group Inc., Aetna Inc., Humana Inc. and Cigna Corp. reported a combined net income of $3.2 billion, a 31 percent leap from the same period in 2009.  Premiums grew faster than medical costs, while most insurers lowered the share of premium dollars spent on actual health services.

The report, “Health Insurance Industry Profits Soar,” points out that the huge profit gains this year follow the Big Five’s record profits in 2009. The top five insurers made record profits, writes HCAN Executive Director Ethan Rome. They did this by

covering fewer people, offering worse benefits, providing less care and charging consumers and employers more in the process. It is an obscene business model: They sell people a product, make it worse but more expensive over time, and then deny people the service they’ve paid for when they need it.

Not only have nearly 3 million people dropped from the insurance rolls mostly because they can’t afford coverage, millions more, according to the report, have had to settle for skimpier coverage with fewer benefits. It provides a succinct translation of UnitedHealth CEO Stephen Hemsley’s insurance industry’s code words during an April teleconference to plain English. Here’s Hemsley:

Consumer-value products featuring consumer responsibility and accountability designs have grown 80 percent year-over-year to 600,000 people. Our leaner benefit offerings that feature variations in network designs, such as premium-designated network incentives, grew more than 30 percent to 900,000 people.

For those of you who don’t speak insurance code, here’s the English:

A lot of people needing health care can’t afford anything other than our lower-priced health plans, and they will have to pay dearly out of their own pockets to see a doctor or fill a prescription. But these plans are profitable and they are spreading like wildfire.

The new health care reform law will put an end to many insurance company abuses, including coverage denials for pre-existing conditions, dropping coverage when people get sick and spend more on actual health care costs.

The report says legislation now in the U.S. House and Senate would provide even greater protection to families and small business from unjustified rate hikes, such as those like Anthem Blue Cross—a WellPoint subsidiary—recently proposed in California.

Those premium increases, as high as 39 percent, were found to be unjustified by an independent expert hired by state regulators to examine Anthem’s claim the increases were justified. But more than half the states have no authority to block or modify premium increases.

The Health Insurance Rate Authority Act (H.R. 4757 and S.3078) would provide unprecedented authority to block unreasonable premium increases before they are allowed to take effect.

The bill would give the U.S. secretary of Health and Human Services the authority to deny or modify premium and rate increases found to be unreasonable. It would create a seven-member Health Insurance Rate Authority, including consumer representatives and insurance experts, to make recommendations on how to lower rates. –Mike Hall, http://blog.aflcio.org/2010/05/14/health-industry-shameless-profit-making-at-consumer-expense/