HHS Report Slams Insurers Premium Hikes While Pocketing Record Profits
Profits for the nation’s 10 largest health insurance companies increased 250 percent between 2000 and 2009—10 times faster than inflation—but that hasn’t stopped the private insurance industry from trying to reach even deeper into consumers’ pocketbooks with huge premium increases.
According to a new report from the U.S. Department of Health and Human Services (HHS), the nation’s five largest insurance companies took in combined profits of $12.2 billion last year, up 56 percent over 2008.
But companies such as Anthem Blue Cross of California, owned by WellPoint, which enjoyed a $4.7 billion profit in 2009, want more. Anthem announced this month it would raise premiums on 800,000 Californians by as much as 39 percent. Insurers in several other states are seeking similar hikes. Says HHS Secretary Kathleen Sebelius:
Over the last year, America’s largest insurance companies have requested premium increases of 56 percent in Michigan, 24 percent in Connecticut, 23 percent in Maine, 20 percent in Oregon, and 16 percent in Rhode Island, to name just a few states. Premium increases have left thousands of families that are already struggling during the economic downturn with an unpleasant choice between fewer benefits, higher premiums, or having no insurance at all. Hard-working families deserve better.
The HHS report says the increases are five to 10 times larger than the growth rate in national health expenditures and are “disturbing examples of the problems that make reforming our health insurance system more important than ever.”
In California, after a huge public outcry and criticism from the Obama administration and Congress, Anthem delayed its rate increases and WellPoint CEO Angela Braly will soon appear before the U.S. House Oversight and Investigations Subcommittee to answer questions about the premium hikes.
Click here for the full HHS report.
In a related health care development, 8.5 million seniors and people with disabilities enrolled in the private for-profit Medicare Advantage programs are seeing their premiums jump by about 14 percent this year, but some may see rate increases as high as 31 percent, according to a report released today.
Leslie Spindle, vice president of Avalere Health, a data analysis firm that issued the report, told the Associated Press:
These premium increases fit within a broader trend of increased financial pressure on the insured. We see very large premium increases and a continued upward creep in how much out-of-pocket expenses beneficiaries are expected to pay, such as co-payments.
Medicare Advantage was designed as a pilot program to privatize Medicare during the Bush administration. It allows seniors to receive their benefits through private insurers who, in turn, are reimbursed by the federal government.
But currently, the government pays private insurance companies, on average, 13 percent more for providing coverage to Medicare Advantage clients than it would pay for the same care under traditional Medicare. Says Medicare spokesman Peter Ashkenaz:
The plans need to explain why these increases are necessary.
Meanwhile, the health care reform debate reignites next week with a televised White House bipartisan health care reform summit. Prior to the Thursday event, the Obama administration is expected to unveil a new health care reform plan that combines elements of the House- and Senate-passed bills. News reports say Republicans also will present a plan.
The details of the proposals are not known. But as AFL-CIO President Richard Trumka said:
The Massachusetts post-election polling made one thing clear: The country will not accept a tax on working families’ health care benefits.
We will keep you posted.