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Third-Quarter Profits Reach $3.4 Billion as Health Insurers Cut Spending on Care, Drop Unprofitable Members
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| Contributor | RP |
| Last Edited | RP Nov 17, 2010 11:34am |
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| Category | Analysis |
| Media | Website - Daily Kos |
| News Date | Tuesday, November 16, 2010 05:00:00 PM UTC0:0 |
| Description | The six largest investor-owned health insurance companies recorded huge profit gains in the third quarter of 2010 by spending a smaller share of premiums on medical care, purging unprofitable members and burdening consumers with higher cost-sharing limits. WellPoint Inc., UnitedHealth Group Inc., Aetna Inc., Humana Inc., Cigna Corp. and Coventry Health Care Inc. made combined profits of $3.4 billion in the three months ending Sept. 30, a 22% increase over the third quarter of 2009, according to an analysis of company filings by Health Care for America Now (HCAN)....
One reason premiums and profits continue rising is that insurers keep reducing the percentage of premiums they spend on actual health care (Table 2), a measurement known as the medical-loss ratio, or MLR, by denying people care. Coventry cut its MLR for employer and individual health plans by an unheard-of 5.3 percentage points to 76.8%. That increased Coventry’s third-quarter profit by 169% from a year earlier. Aetna’s MLR plunged 5.1 percentage points to 80.5%, and its third-quarter profit surged 53%. Other companies also reported double-digit profit growth and major reductions in MLRs, consistent with long–term industry trends. In 1993, the leading health insurers used about 95 cents of every premium dollar on actual health care. By 2007, after years of mergers and acquisitions that put much of the U.S. population under the control of a handful of for-profit companies, investor-owned health insurers had jacked up premiums and lowered the medical-loss ratio to around 81%. |
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