2009 was a dismal year, economically speaking — unless you were a health insurer:
If no health care overhaul passes Congress, health insurers may be in for a windfall — and one far larger that most Americans probably realize.
According to a study by a pro-health reform group published Thursday, the nation’s largest five health insurance companies posted a 56 percent gain in 2009 profits over 2008. The insurers including Wellpoint, UnitedHealth, Cigna, Aetna and Humana, which cover the majority of Americans with insurance.
The insurers’ hefty profit gains came even as 2.7 million more Americans lost their insurance coverage due to the declining economy. (John Byrne, Raw Story)
Explanation, according to the insurance industry? In 2008 they took a bath in the market, so the comparison is artificially inflated. Gee, my retirement income took a bath in 2008, too. In fact I’m not doing that well in 2009, either. And that points up a fact usually not recognized: insurance companies are basically investment companies. They take our premium money and invest it between the time of receiving it and when they have to pay it out. The longer they get to hold it, the more money they make on their investments. And if they invest it poorly, they deny claims and jack up premiums to recoup the losses, or more accurately, the less than obscene profits. Last year the top five spent less a smaller proportion of their premiums on medical care and more on salaries, administrative expenses and profits. And they jacked up premiums, the most notorious being Wellpoint’s Anthem Blue Cross California, up 39% for 2010. Wellpoint claimed they lost money in California last year but at the same time they posted a $4.7 billion profit. $4.7 billion. That’s 4.7 thousand millions. Their 7.3% profit margin was highest of the big five. But they are still raising premiums 39% and considering paying a dividends to investors, not something companies that lose money usually do.
It is a commonplace to say government programs are notoriously inefficient and wasteful. The real truth is that premiums go farther in the single-payer Medicare program which insures people with high medical expenses (the elderly). Medicare doesn’t have to make an obscene profit and spends far less in administrative expenses, many of which go to figuring out ways to deny claims. Private health insurers are among the most wasteful and socially unproductive businesses in the country. They provide no useful services of any kind. They are parasites.
I can’t say enough bad about health insurance companies. They shouldn’t exist. They are ruining the country. And the Obama Administration and the Congress — all Republicans and too many Democrats — just keep shoveling more money into their hungry maw.