Health Insurance Providers Find Ways to Prosper as More People Lose Coverage

Source: Andrea Orr, Economic Policy Institute, August 19, 2009

UnitedHealth Group Inc., the largest U.S. health insurer, last month reported that its second quarter profit more than doubled to $859 million, while its revenues surged 79% even as enrollments fell. In other words, the company made more money from fewer people. Not every health insurer had such strong results, but a look at recent second quarter earnings reports shows that most continue to earn large profits even as the economy stagnates and tens of millions of Americans go without health insurance.

The comments these insurance company executives made to Wall Street offer an enlightening account of how they plan to grow their profits and how attention to the bottom line trumps their ostensible mission of providing affordable health care to all Americans. This view was articulated most clearly by Aetna Inc. CEO Ron Williams, who said on a conference call with industry analysts, “We would be willing to forgo membership growth if necessary. We have a clear bias toward profitability over growth.”

Some highlights:

– More cutbacks in coverage are on the table.
– Higher costs are causing many people to drop their insurance.
– By insurers’ own admission, lack of health insurance contributes to higher medical costs.
– Many unemployed can’t afford COBRA.
– Even as they protest the creation of a public health insurance option, many insurers profit from rising unemployment and increased Medicaid and Medicare enrollment.
– Cost cutting is planned to achieve further growth in the face of worsening economy.
– Pharmaceuticals remain hugely profitable.

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