Three of the biggest health insurers have announced quarterly earnings in the past few days. If Americans were able to eavesdrop on what executives from those firms tell their Wall Street masters every three months, they would have a better understanding of why premiums keep going up while the number of people with medical coverage keeps going down.
It only takes three words, when you get right down to it, to describe the real MO of those folks: profits over people.
CIGNA and Humana are scheduled to report earnings this week. The three companies that have already spoken -- UnitedHealth, WellPoint and Aetna -- earned a combined $2.51 billion from April through the end of June, more than analysts expected. On a per share basis, their earnings were up more than 17 percent on average compared with the second quarter of 2010.
Those results were no anomaly. The big for-profit health insurers have been blowing analysts' expectations out of the water for several quarters in a row, even as the country struggles to recover from the recession and the number of Americans without coverage -- one out of every six of us -- continues to rise.
Based on their strong performance during the first half of this year, UnitedHealth, WellPoint and Aetna have all have raised their profit forecast for 2011. In other words, they expect to earn far more this year than last year and far more than even the most hopeful investors and analysts had anticipated.
This has made Wall Street very happy indeed, as reflected in the breathtaking increase in the companies' share prices over the past year. Since the end of July 2010, investors have bid up the stock by more than 50 percent at four of the big five. WellPoint, the laggard, saw its stock price increase by a still-impressive 35 percent.
One of the secrets to achieving these results is what the insurers euphemistically call "medical management." That often translates into denied claims and denied coverage for doctor-ordered care. The fewer claims you pay and the more procedures you refuse to pay for, the more money is left over for investors to put in their pockets.
Another important way they've been able to sustain such a string of impressive earnings results is to shift more and more of the cost of care to their policyholders. An increasing percentage of these companies' policyholders are enrolled in plans that require greater cost sharing. Those policyholders pay more for care out of their own pockets than ever before while their insurers are paying much less.
The insurers are loathe to admit this and have been making up a host of incredible excuses to explain why they are paying so much less for care than investors and analysts had expected and so much less on a percentage basis than in previous years.
At the end of 2010, executives told Wall Street that the "utilization" of medical services was lower than in 2009 because the flu season last year was less severe. They assured investors utilization would return to more normal levels during the first quarter of 2011.
When it didn't, the bad winter weather was to blame. Insurance executives wanted us to believe that people were not getting the care they needed because it was colder and snowier than usual. They assured us that medical spending would jump again as soon as the weather improved and the ice and snow melted.
Surprise! It's August and people are still not going to the doctor or picking up their prescriptions or checking into the hospital as much as they usually do. .
And what's the excuse this time? It's the economy, they say -- even though the recession officially ended more than a year ago. At least UnitedHealth's executives ackowledged that, as AP reported, "health plans that make patients more aware of the cost of care may be having an impact."
May be? Give me a break. And stop the double-speak. What we're so aware of is that we're simply unable to get the care we need because of the often sky-high deductibles of today's health plans, which insurers mislabel "consumer-driven."
Insurance industry executives are experts at talking in code, which makes it difficult to understand just how much they value profits over people. Occasionally, though, they slip up, as Aetna's chief financial officer, Joseph Zubretsky, did last Wednesday during his company's conference call with analysts.
Clearly concerned that investors might think Aetna was willing to grow by adding people to its rolls who might have substantial medical needs, Zubretsky disabused Wall Street of that notion.
"We would like to have both profit and growth, but if you have to choose between one or the other, you take margin and profit and you sacrifice the growth line," Zubretsky said.
Whether he knew it or not, he was channeling WellPoint CEO Angela Braley. In a 2008 conference call with financial analysts, Braley had to acknowledge that her company had spent more on medical care during the previous three months than she and Wall Street had expected.
In the future, she promised, "We will not sacrifice profitability for membership."
That was exactly what Wall Street wanted to hear.
WellPoint and Aetna and other insurers have demonstrated repeatedly that while they will do all they can to avoid sacrificing profitability for membership, they are quite willing to sacrifice their members -- and the American public -- for profits.
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If the patient was the client, the profit motive would evoke a very different behavior. The industry payers and providers know they must maximize system revenue. Over treating and over medicating is a product of this incentive approach. It is not an approach serving patients or a country struggling to keep its head above water. The wrongheaded incentives are the issue. Blaming corporate behavior leads nowhere and does not solve the fundamental systemic problems of access, quality and cost.
The Dartmouth Medical Mapping Project confirms best patient results are not a function of treatment volume. The VA system knows this well. Their robust database of conditions and treatments that produce the best outcomes, are agreed to by the patient, and typically are expensive
.
We need a system refocused on the patient’s long term well being and rewarding providers for that result. Insurers can remain an integral part of the system. In several developed countries they provide basic plans at cost while making their profits on premium services. We will not solve the problem by turning everything over to Medicare. They drastically underfund care which if applied to all patients would close providers down. Results are what we should pay for.
ahh, that was clever, thanks :)
( http://en.wikipedia.org/wiki/List_of_ICD-9_codes )
http://www.consumeraffairs.com/news04/2005/bankruptcy_study.html
Medical Bills Leading Cause of BankruptcyÂ, Harvard Study Finds
"...Today'Âs health insurance policies -- with high deductibleÂs, co-pays, and many exclusions -- offer little protection during a serious illness. Uncovered medical bills averaged $13,460 for those with private insurance at the start of their illness. People with cancer had average medical debts of $35,878.
"The paradox is that the costliest health system in the world performs so poorly. We waste one-third of every health care dollar on insurance bureaucracÂy and profits while two million people go bankrupt annually and we leave 45 million uninsured" said Dr. Quentin Young, national coordinatoÂr of Physicians for a National Health Program.
"With national health insurance ('Medicare for All'), we could provide comprehensÂive, lifelong coverage to all Americans for the same amount we are spending now and end the cruelty of ruining families financiallÂy when they get sick."
Medical disasters account for over 60% of personal bankruptciÂes.
If the politicians actually ran any part of government, your sarcasm might be justified.
I have heard that laws or regulations were passed that MADE it a "legal fiduciary duty for the board to maximize shareholdeÂr value" probably because of the actions of someone like Enron. I have also read stories that discuss the shift to shareholder as primary stakeholder as if it occurred in a vacuum.
Get used to it.
This seems to me to be all the more reason why the ACA is unacceptable - because it does not move to Universal Healthcare without for-profit insurers in the mix.
For profit companies are, after all, for profit.
Until we remove these companies out of the healthcare mix, they will continue to take many times what government does for 5.5%.
When you are told you need a complex operation, or that you have had a heart attack, or stricken with cancer your choices are limited.
Now part of the issue that is never discussed are the millions of Americans with horrible eating habits and lack of exercise which is straining the system. We can't fix the system is Americans keep adding to the problem.
Farms, food production, distribution and sales are not granted oligarchy status by government as are healthcare insurers.
Some farmers still get government subsidies, which is a problem, but Tea-Publicans like their corporate socialism, don't they?
By region, there is very limited competition - by government design.
When we grant local monopolies, we generally put considerable controls over their operation - as with local power utilities. And, we limit their profits to a required rate of return to gain stockholders an adequate profit for their considerable capital investment.
Healthcare insurers do not need capital investment to produce - they only need it to make more money off of office space. They are not much regulated. And, their profits, despite have no real capital risk - are multiples what a power utility would get.
First, I suppose we must ask whether you care if you pay for the same services to the government in taxes or to a private company. I am indifferent - as long as I get similar services. The money is coming out of my spendable income either way.
Second, do you care that the company you work for has more control over you if there is employer supported healthcare. If you like having your company control you, instead of some minor control through government representatives, then private insurers work better. One must remember, however, that the insurers work for the employers - not you. You just help to pay to defray the company's costs.
Third, do you really like contributing some 25% of your healthcare dollars to profit a company when the government can tell you no (equitably, not based on your company's control) for 5.5%?
Fourth, would it bother you a lot if your total healthcare insurance went down only a little - because the 19.5% profit was removed and some portion of it went to cover homeless, unemployed, sick neighbors? But, everyone is covered - so, if you or a family member hits hard times, then they are covered too?
The only thing that all health insurance companies count on is you, the consumer, backing down once they say "no." You have to keep writing letters and actively manage your health care to get what you paid for.