It’s earnings season again and publicly traded companies – including health insurers – are rolling out their performance numbers. Note that the “performance” being touted has nothing to do with how well the insurers met patients’ needs. On the contrary, health insurers are most successful when they collect the maximum amount of premium dollars and pay out the minimum possible for claims. Turns out that Cigna, the health insurer who denied teen Nataline Sarkisyan a necessary liver transplant in 2007 resulting in her death, was spectacularly profitable in 2019, reporting over $5 billion dollars in profits. Get the facts on the factors driving health insurer performance in this commentary by HEAL California’s contributor, Mark Wrede.
Commentary:
In 2019, Health Insurers Raked It In While Americans Paid the Price
2019 proved to be another banner year for health insurance companies and their investors. Once again, insurers managed to hold the line against paying claims, reaping billions of dollars in profits. At the same time, premium increases continued eating away at our paychecks, and the increases keep coming. What’s behind this tsunami of profits?
According to Paige Minemyer in Fierce Healthcare of February 6, 2020, Cigna reported $5.1 billion in profits for 2019, nearly doubling its profit from the previous year of $2.6 billion in a single jump, driven largely by the insurer’s acquisition of Express Scripts. This sounds likely, but there are other possible explanations.
Manojna Maddipatla and Tamara Mathias reported in Reuters the same day that it is Cigna’s customer growth in Medicare Advantage plans that is driving increases in forecasted income.
In fact, Medicare Advantage is becoming a life saver for many health insurance companies, who are posting large rates of growth in enrollment. Trading under the trusted name of Medicare, yet supposedly better, Medicare Advantage’s appeal to retired seniors is strong.
Yet behind the scenes, Medicare Advantage plans are increasingly being exposed for excessive claims denials and soaring out-of-pocket costs. But once you’ve joined Medicare Advantage, if you should think of going back to Original Medicare plus a Medigap policy, you may face medical underwriting, higher premiums or both.
As the eighth largest among healthcare insurance companies, Cigna is not alone in enjoying exceptional annual returns. According to Modern Healthcare, Anthem, the third largest health insurance company, also enjoyed an increase in income of over 100% in the last quarter of 2019!
In part the boost arose from the 2019 suspension of the Health Insurance Fee paid by insurers to fund the state and private markets or exchanges established by the ACA.
The fee is customarily characterized as a factor driving up healthcare costs. But actually the government-supported exchanges serve the health insurance companies, marketing their products with websites and personnel paid for by the public. The fee reimburses taxpayers for promoting private health insurance products.
Although it was thoughtful of the current administration to suspend the fee to insurers this past year, the cost of running the insurance exchanges will then be fully borne by all of us as a subsidy to those insurers who participate in the exchanges.
Since the taxpayers already carry the burden of approximately 56% of all health insurance expenditures, it certainly seems that the goal of America’s health policy may be to direct public dollars to private profits. That’s why investors flock to invest in health insurance companies.
America needs a healthcare system focused on health — not on returns to investors. The public needs to get better results for its healthcare dollars, not to have the money spent on elaborate financial schemes to prop up the healthcare marketplace to benefit investors.
While 2019 was a banner year for health insurance investors, the banner was tattered for patients and families.
Does any of this translate into lower premiums or better service for you? NO. Our banner must wave for Medicare for All.
–Mark Wrede
Mark Wrede is a freelance content researcher and writer living in Los Angeles, California.
markwrede@ca.rr.com
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