Deforming Health Care: A Banner Year

Note to business-school grads: if they’ve told you you’re too greedy and cruel to be an investment banker or an oil executive, don’t despair; they’re going to love you in the health-insurance industry.

The country’s five largest health-insurance companies increased their combined profits by $4.4 billion dollars in 2009 — the year everyone else was struggling to stay aflloat in the worst recession in memory — according to a study by the reform advocacy group “Health Care for America Now!” The study shows how the five companies (WellPoint, CIGNA, UnitedHealth Group, Aetna Inc. and Humana) pulled it off; by collectively dropping insurance coverage for millions of customers, denying coverage to millions more, eagerly enrolling customers in privately administered, publicly subsidized plans such as Medicare Advantage (called in some circles “socialized medicine”), reducing the proportion of premium income paid out for actual health care while increasing that spent for insurance administration (which is to say, to pay for executive salaries and to hire more clerks to deny claims).

The combined profits totalled $12.2 billion, an all-time record high and an increase of 56% over 2008. One company, CIGNA, enjoyed a 346-per-cent profit increase. But it should be noted that Aetna, unlike the others, increased both its private-customer base and increased its spending on medical care, so that unlike the others its profits were not larger than those of the previous year. Together, the companies dropped 2.7 million private policies, while adding 688,000 lucrative “socialized” policies — Medicare, Medicaid and state Childrens’ Health Insurance Plans, for which a grateful nation pays them more than they would dare to try to charge in a free market.

The cost to the government of providing health care for the elderly and the poor is skyrocketing — in the last year, the increase has been the largest for a single year since the government started keeping track of the numbers, and is a major contributor to the deficit. By next year, the government will be paying more to care for the growing numbers of elderly and poor than all the health insurance companies put together will be paying to care for the shrinking number of people they are willing to insure without “socialized” subsidies.

Not only do these companies rake the money in, they keep it — even when it isn’t theirs. Most of the companies freely admit to delaying six to eight weeks before paying claims from doctors and hospitals. And many use their profits not to reduce rates or improve service, but to buy back stock, thus increasing per-share earnings and triggering executive bonuses.

Big Insurance obviously intends to keep it up: massive price increases for private individual policies (the kind 30 million Americans need, and the companies hate) have been announced so far this year in four states: California (Anthem Blue Cross/Wellpoint, +39%), Maine (Anthem Blue Cross/Wellpoint +23% on top of +32% last year), Kansas (an unidentified insurer was jawboned by state regulators down to a +10-20% increase) and Oregon (multiple insurers, +15% after +25% last year).

The insurers’ public relations departments, when not busy predicting that health-care reform will increase rates, blame the astronomical rate increases they want now on the increased cost of medical care. At the same time they are reporting proudly to their shareholders that they are spending ever less on medical care.

So let’s review: costs are skyrocketing, private profits are at all-time highs, millions more people every year cannot get coverage, those who need it most find it cancelled (yes, there’s a bureaucrat between them and their doctor), “socialized” health care programs are growing fast, increasing the deficit rapidly as they do..

Remind me: what awful things were going to happen if we dared to try to reform this system?

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