It was reported recently that the nation’s top five health insurers made nearly $12 billion in profits last year. It appears that the insurers – UnitedHealth, WellPoint, Aetna, Humana and Cigna – were more profitable than the top five firms in the energy, construction, aviation, motor vehicle and parts manufacturing industries. A new fact sheet was released by Rep. Pete Stark (D-Calif.) revealing this information.
According to Rep. Stark, three of the insurers padded their profits by more than $3.5 billion by boosting premiums. Meanwhile, he said, Aetna and WellPoint increased their profits by $800 million by spending less on medical care. Rep. Stark, the ranking member of the House Ways and Means health subpanel, touted healthcare reform provisions that require greater transparency from insurers. Rep. Stark said in a statement:
While insurance companies were proposing double-digit premium increases on consumers, they were earning billions in profits at the same time. The health reform law protects consumers from unjustified premium hikes, while ensuring that premium dollars go primarily to medical care and not profits.
The nation’s health insurance lobby claims that industry profit margins have been generally declining since 2005. America’s Health Insurance Plans said the insurers’ average profit margins (4.9%) are slim compared to pharmaceutical companies (16%) and the entire healthcare sector (21%).
The Department of Health and Human Services announced $200 million in grants last month to help states set up programs to scrutinize “unreasonable” rate hike proposals. Insurers that show a pattern of excessive rate hikes can be banned from offering plans in new state-run health insurance exchanges opening in 2014. New medical-loss ratio rules also require insurers to spend at least 80% (85% in the large group market) of premium dollars on healthcare services.
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