It’s reporting time for health insurance companies, and so, to the tape.
Aetna Inc. (AET) reports “…second-quarter 2009 operating earnings of $308.5 million, or $.68 per share, a 28 percent decrease from the prior-year quarter.” The company underestimated the explosion in medical costs, and set premiums too low (page 3). Not to worry, Wall Street:
Mark Bertolini, president, said, “We believe these increases in Commercial medical costs are largely the result of continued higher claim intensity, such as services rendered in a higher cost setting and more tests and procedures per visit, resulting in higher costs for emergency room, ambulatory, laboratory and preventive services. We are taking immediate actions to address these issues.”
That doesn’t bode well for policy holders or doctors, now does it?
Premium revenues were up $738.7, 11.8%, primarily from membership growth and premium increases (page 4). It’s distressing to think that wasn’t enough premium increase. Aetna admits thats that it’s benefit payout ratios are high. It paid out about 86% of commercial premiums in benefits, compared to 89% of Medicare revenues, and over 92% of Medicaid revenues, but it promises investors it will bring those commercial payout ratios back down, maybe to the 80% range where they were in the second quarter of 2008. That will leave plenty of money for dividends and stock repurchases. And bonuses.
Cigna Corporation (CI), reports increased profits: $1.58 per share in the second quarter, up from the same year-ago quarter profit of $.96. Health care segment results were pretty good at $177mn, down slightly from the same year-ago quarter, but up from $154mn in the first quarter. CI says:
Premiums and fees in the second quarter 2009 decreased approximately 7% relative to second quarter 2008 primarily due to a decline in medical membership, partially offset by rate increases.
That decline in membership was 7.3%, 878,000 human beings. Better luck next quarter.
WellPoint, Inc. (WLP), reported that second quarter income was $693.5, down somewhat over the same year-ago quarter. A large part of that difference was the investment losses of $.07 in the second quarter, compared with losses of $.03 in the same year-ago quarter. A good bit of the reduction of revenues is lower membership. Here’s what WLP says about that:
Medical enrollment totaled 34.2 million members at June 30, 2009, a decrease of 1.1 million members, or 3.0 percent, from 35.3 million at June 30, 2008. The decline in membership was most significant in the Local Group business, which experienced a 734,000-member reduction from the prior year quarter, primarily due to in-group enrollment losses caused by the rise in unemployment.
WLP projects an increase in medical expenses of 8% for the rest of the year. It tells us that it intends to increase premiums enough to stay ahead of that trend, plus its costs. Page 2.
It looks like one big problem for these companies is loss of premiums because of unemployment. These companies must be salivating at the prospects of government subsidized premiums. Current profits are enough to pay for drinks and dinner for lobbyists and their dear dear Congressional friends.
Related posts:
- “Reform” Without Public Option: Revenues, Profits for Health Insurers Set to Soar
- No Public Option Means Hundreds of Billions in New Assets for Giant Health Companies
- Fool Me Once: The Insurance Industry Looks to Tort Reform to Pad Profits
- WellPoint Policyholders Can Expect Double Digit Increases
- “Hallelujah!” Health Insurers Reaping “Bonanza” in Closed-Door Negotiations
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At some point in this debate just for the hell of it, someone should re-release the John Grisham movie “The Rainmaker” to remind everyone exactly how greedy these caricatures of human beings can really be. I think there was more than a morsel of truth in that novel, and for the non-reading segment of the population the moral (or utter lack thereof) of Grisham’s “Great Benefit” might not be lost on some folks who have expressed the opinion “Keep your [government] hands off my Medicare” (h/t Paul Krugman).
Wow, anytime some right-winger or Blue Dog says anything against a public option we should just trot out the insurance companies balance sheets.
While we the people keep shelling out more and more for less and less coverage, they’re letting the good times roll.
That’s not going to sit well with John and Joan Q. Public. I’m sure the MSM will try their best to insulate the public from this disturbing bit of knowledge, but maybe we can get through the firewall.
Quarter by quarter profits – that’s the ticket to better health, right? Right?
Uninsured up from 46 million in 2007 to 52 million declared in 2009, attributed to unemployment, the recession, and steep rises in premiums.
http://www.casavaria.com/cafes…..n-2-years/
It’s so ridiculous to continue to read the endless chatter here about ’single payer’ and a ‘public plan’. Is no one a realist anymore? This is one of the nefarious byproducts of blogging.
What about ‘it’s not going to happen’ do you not understand?
What about ‘this is a moderate country not a far left one’ do you not understand?
What about ‘your attacks’ on Obama have done irreparable damage to his popularity and power do you not understand?
Getting reform that eliminates pre-existing conditions as a reason to deny coverage . . . and does not allow insurance companies to drop you if you pay your premium is good enough for me.
People keeping using that phrase “keep the insurance companies honest”. I don’t think that phrase means what they think it means.
Since when have the Health Insurance companies been “honest”? I mean, I have a friend who makes his living trying to fight health insurance companies when they refuse to pay for what their policy clearly requires them to pay for, so I may be jaded; but hey! Profit motive is the only principle a corporation has. That’s just the way it is.
Health is too important, too key to every person’s life, to expose it to the mercies of something completely without moral or ethical principles. I’m not saying that corporations can’t be run by people with moral and ethical principles; just that it doesn’t work out that way in real life.
Let’s just cut to the chase and go 100% single payer. I realize that suggesting that losing another 16% of our GDP, by destroying the Health Insurance industry entirely, right now as we’re just starting to pull out of our economic dive will be wildly popular, because this particular 16% needs killing. Those who have any interest in the well-being of their fellow Americans can get a job in Health Care, instead of in Health Care Prevention, and the other 95% of them can just take a lateral transfer into the financial sector or organized crime or the Republican party and continue to use the skills they’ve honed.
Not that I have a particular opinion, one way or the other…
In all, 75 percent of participating small businesses expressed support for a meaningful role for a public
health insurance plan in health reform.
Insurance companies are counting on having enough fish like you to enable them keep piling up profits on the backs of sick people.
Talk about the bigotry of low expectations, that sounds just like the Animal House pledge: “Please sir, may I have another?”
I spoke with someone from Mike Ross’s office an hour ago. I briefly stated my support for a strong health care bill with (at least) a public option, and politely expressed my disappointment in Ross’s efforts to obstruct reform. I then asked if it was true that the Congressman has stock in a pharmacy company (as reported here). The shyster’s arrogant employee hung up on me….or maybe someone was at the door and he needed to leave abruptly —- another wad of cash for Mikey for his sell-out of the American public.
I am not debating the merits of single payer or a public plan. I would support either. My point is that pragmatism and realism makes the world go round, especially in this country. We are not and never will be a far left country. Barack Obama, Reid, Pelosi and Biden are as good as it will ever get. Ever.
And instead of realizing that and keeping unified and fighting to get what we can, the far-left decided that attacking democrats and Obama was preferable. Now his poll numbers are plummeting, he is a weakened president presiding over a divided democrat party with a good possibility that in 2010 we will lose control of congress and call Mitt Romney president in 2012. In addition you are getting nothing you wanted; it was all for naught as people like me knew it would be.
You think the public option is far left? Most of us thought we were being pragmatic by supporting that instead of single payer.
“democrat party” @ 10 = Freudian slip?
Isn’t Senator Chris Dodd beyond the age where active measures should be take for his prostate cancer??? This guy should belly up to the new reality if he is going to vote for it. Palliative measures only for the old guy!!
Single payer was never an option. That was a false starting point and patently absurd to even discuss in this country. As far as a public option is concerned it should be pretty clear that there are not enough elected officials willing to vote for it.
But, a bill will get signed and pre-existing condition exclusions and dropping people who pay their premium will end. That’s a good thing.
But the health insurers WILL be able to adjust premiums for age. Watch them jack up premiums for the over 50 and close to medicare groups – with the “mandate” to purchase their products, the oldsters will be held hostage to the medical industrial complex. Hope this goes to the Supreme Court. It should be unconstitutional for government to require citizens to purchase a product from a for-profit company, but with the current set of corporate stooges on the bench, I don’t hold out much hope for justice.