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Nation's Largest Insurers Register $12.2 Billion in Profits, Report Says

By Jane Norman, CQ HealthBeat Associate Editor

Feb. 11, 2010 -- The nation's five largest health insurance companies reported historic profits in 2009 but at the same time dropped 2.7 million Americans from private plans, according to a report released Thursday by advocates for Democrats' health care overhaul.

The companies' earnings combined with "skyrocketing" premiums demonstrate the need for change, said Rep. Rosa DeLauro, D-Conn., who took part in a conference call with reporters organized by the group Health Care for America Now (HCAN). Negotiations on health care measures are continuing and President Obama has called a meeting for the end of the month, she said, referring to a bipartisan health care summit set for Feb. 25.

"What we need to do is press forward to have health insurance reform to provide economic security for America's families," DeLauro said.

DeLauro's comments came as lawmakers continue their search for a route to success on a health care overhaul that the president continues to say is a top domestic priority. Obama has said he won't abandon separate measures approved by the House and Senate, but is open to ideas on how to meet the "core goals" of the overhaul. While both Democrats and Republicans agree costs are too high already and rising too rapidly for families and businesses to bear, there's not much more consensus between the parties.

In the past few days the debate also has been roiled by news that Anthem Blue Cross proposes to raise premiums for California customers in individual plans by as much as 39 percent. Anthem was not included in the HCAN report.

The report by HCAN focused on the five largest for-profit health insurers — UnitedHealth Group Inc., WellPoint Inc., Aetna Inc., Humana Inc., and Cigna Corp. The combined profit from the five companies hit $12.2 billion, a 56 percent increase from 2008, the report said. All but one of the companies — Aetna — saw earnings increase from 2008. Three of the five spent a smaller proportion of premium dollars on actual health care expenses, as opposed to administrative costs and profits, the report said.

Meanwhile the cost of health insurance is forcing Americans to drop private plans, the report said. "The shedding of 2.7 million members from private health plans is part of the industry's long-term shifting of responsibility for the care of sick, older or lower-income customers to taxpayer-supported health insurance" such as Medicaid, Medicare or the Children's Health Insurance Program, HCAN said.

But Robert Zirkelbach, a spokesman for America's Health Insurance Plans, said health plan profits are well below profits for other segments of the health care industry. "For every dollar spent on health care in America, less than one penny goes towards health plan profits," Zirkelbach said.

Insurers also contend that premiums go up when prices of medical services go up, pointing to a recent report by Centers for Medicare and Medicaid actuaries showing that national health care expenditures are projected to have consumed more than 17 percent of Gross Domestic Product in 2009. "The real focus needs to be on the increase in the underlying cost of medical care, which is putting health care coverage out of reach for many families and small businesses," said Zirkelbach.

The number of people health insurers cover is dropping because workers are losing jobs and their employer-provided insurance, both advocates and insurers agree. But Richard Kirsch of HCAN said there's also a trend away from private insurance that has continued for years, even in good times, as rates go up. There's a pattern in which companies try to purge customers who are sicker and more expensive, he said.

Judy Feder, a professor of public policy at Georgetown University who took part in the HCAN call, said that when prices and profits rise, "you know you've got an industry that's not working." The health care overhaul will stop discrimination based on pre-existing conditions and implement new rules requiring premium dollars be spent on health care rather than profits or administration, she said.

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