Wednesday, August 17, 2016

Don't Cry For Me Aetna (and UnitedCare and Anthem)!


(Update:  Aetna may have pulled out of these states because they didn't get Federal approval for their merger with Humana.  See Aetna's DOJ Letter)


Waaah!  Health insurers are crying.  They are losing money and can't carry on insuring all of the new ACA enrollees.  Aetna just announced that it was pulling out of 11 states where it offers ACA plans to individuals due to fabulous losses it incurred: $430million last year.  (CNN)  Other insurers have claimed similar or greater losses.  It kind of makes you feel sad for their financial burden. (Note: Aetna pulled out of California, my home state, after 2014 leaving me high and dry.)

I guess that's why Aetna's CEO saw a paltry pay raise of only $2.2m last year ($15.1m in 2014 to $17.3m in 2015 -  WJS).  UnitedHealth's CEO really suffered when he earned $66m in 2014, a belt-tightening increase of $42m from 2013 - FierceHealthCare).

It's true that a lot of insurers got slammed with a lot of new enrollees incurring more health services than expected.  Perhaps the most controversial part of the ACA was the mandate provision forcing people to buy health insurance.  The reasoning was simple.  How could insurers afford to get rid of all of those fancy restrictions on benefits (e.g., life time caps, pre-existing conditions, etc.) if they only had sick clients.  They needed healthy clients to pay premiums to make up the difference.  

As it turns out, many of the new ACA enrollees are not as healthy as anticipated.  They wound up (heaven forbid) actually using their health insurance policies for (wait for it)...health care. And now insurers want to stop offering individual policies because they claim that they are bleeding money.

A cursory examination of their woe-is-me claims shows that a loss in the individual health policy business is not actually making much of a dent in the overall profitability of major insurers:
  • UnitedHealth's 2015 net profit: $5.8B (up from $5.62B)  
  • Aetna's 2015 net profit:  $2.4B (up from $2B)
  • Cigna's 2015 net profit: $2.09B (down from $2.1B 2014)
  • Humana's 2015 net profit:  $2.4B (up from $2.2B)
(Note:  all figures taken from the company's own annual financial statements)

Remember, these figures have already accounted for the losses from ACA policies.  So not one of these companies showed a loss due to their ACA business.  They simply made less profit.  Aetna's profit actually increased despite their ACA losses.  

So if the individual policy business is tanking, then where is this profit coming from.  Turns out that most of these profits are coming from you, the taxpayer. Half, or even more, of these profits derive from Medicare, Medicaid and other government related policies. In other words, these companies are profiting from your tax dollars while making it harder for individuals to become insured by them under the ACA exchanges.

That's like paying the mechanic to fix your car and then someone else get's to drive it.  It's not right.

(Stay tuned...Are the insurers really spending more on patients?)




3 comments:

  1. From $80 a month to more than $400. From a $1000 deductible to a $5000 deductible. Next year I can't afford to pay $500 a month and you made me wait 5 weeks before you would let me go to the hospital. Insurance companies got a free pass. Their CEO's are STILL getting paid while the rest of us go to the poor house.

    ReplyDelete
  2. And why do CEO's get such a pass? It's because they are not motivated to help their customers. Instead they are beholden to the shareholders. Can you imaging a retail clothing store like Gap treating their customers this way? OF course not. That's because consumer satisfaction is not a driving factor in the successes of insurance companies unlike practically every other business.

    ReplyDelete
  3. And why do CEO's get such a pass? It's because they are not motivated to help their customers. Instead they are beholden to the shareholders. Can you imaging a retail clothing store like Gap treating their customers this way? OF course not. That's because consumer satisfaction is not a driving factor in the successes of insurance companies unlike practically every other business.

    ReplyDelete