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Health Insurers Making Record Profits as Many Postpone Care
The nation’s major health insurers are barreling into a third year of record profits, enriched in recent months by a lingering recessionary mind-set among Americans who are postponing or forgoing medical care.
Large insurance companies continue to press for higher premiums, even though their reserve coffers are flush with profits and shareholders have been rewarded with new dividends. Many defend proposed double-digit increases in the rates they charge, citing a need for protection against any sudden uptick in demand once people have more money to spend on their health, as well as the rising price of care. (PressTV file image) The UnitedHealth Group, one of the largest commercial insurers, told analysts that so far this year, insured hospital stays actually decreased in some instances. In reporting its earnings last week, Cigna, another insurer, talked about the “low level” of medical use.
Yet the companies continue to press for higher premiums, even though their reserve coffers are flush with profits and shareholders have been rewarded with new dividends. Many defend proposed double-digit increases in the rates they charge, citing a need for protection against any sudden uptick in demand once people have more money to spend on their health, as well as the rising price of care.
Even with a halting economic recovery, doctors and others say many people are still extremely budget-conscious, signaling the possibility of a fundamental change in Americans’ appetite for health care.
“I am noticing my patients with insurance are more interested in costs,” said Dr. Jim King, a family practice physician in rural Tennessee. “Gas prices are going up, food prices are going up. They are deciding to put some of their health care off.” A patient might decide not to drive the 50 miles necessary to see a specialist because of the cost of gas, he said.
But Dr. King said patients were also being more thoughtful about their needs. Fewer are asking for an MRI as soon as they have a bad headache. “People are realizing that this is my money, even if I’m not writing a check,” he said.
For someone like Shannon Hardin of California, whose hours at a grocery store have been erratic, there is simply no spare cash to see the doctor when she isn’t feeling well or to get the $350 dental crowns she has been putting off since last year. Even with insurance, she said, “I can’t afford to use it.” Delaying care could keep utilization rates for insurers low through the rest of the year, according to Charles Boorady, an analyst for Credit Suisse. “The big question is whether it is going to stay weak or bounce back,” he said. “Nobody knows.”
Significant increases in how much people have to pay for their medical care may prevent a solid rebound. In recent years, many employers have sharply reduced benefits, while raising deductibles and co-payments so people have to reach deeper into their pockets.
In 2010, about 10 percent of people covered by their employer had a deductible of at least $2,000, according to the Kaiser Family Foundation, a nonprofit research group, compared with just 5 percent of covered workers in 2008.
Doctors, for one, say patients’ attitudes are changing. “Because it’s from Dollar 1 to Dollar 2,000, they are being really conscious of how they spend their money,” said Dr. James Applegate, a family physician in Grand Rapids, Mich. For example, patients question the need for annual blood work.
High deductibles also can be daunting. David Welch, a nurse in California whose policy has a $4,000 deductible, said he was surprised to realize he had delayed going to the dermatologist, even though he had a history of skin cancer. Mr. Welch, who has been a supporter of the need to overhaul insurance industry practices for the California Nurses Association union, said he hoped his medical training would help him determine when to go to the doctor. “I underestimated how much that cost would affect my behavior,” he said.
Dr. Rebecca Jaffe, a family practice doctor in Wilmington, Del., said more patients were asking for the generic alternatives to brand-name medicines, because of hefty co-payments. “Now, all of a sudden, they want the generic, when for years, they said they couldn’t take it,” she said.
The insurers, which base what they charge in premiums largely on what they expect to pay out in future claims, say they still expect higher demand for care later this year. “I think there’s a real concern about a bounce-back, a rebound, in utilization,” said Dr. Lonny Reisman, the chief medical officer for Aetna.
Because they say they expect costs to rebound, insurers have not been shy about asking for higher rates. In Oregon, for example, Regence BlueCross BlueShield, a nonprofit insurer that is the state’s largest, is asking for a 22 percent increase for policies sold to individuals. In California, regulators have been resisting requests from insurers to raise rates by double digits.
Some observers wonder if the insurers are simply raising premiums in advance of the full force of the health care law in 2014. The insurers’ recent prosperity — big insurance companies have reported first-quarter earnings that beat analysts expectations by an average of 30 percent — may make it difficult for anyone, politicians and industry executives alike, to argue that the industry has been hurt by the federal health care law. Insurers were able to raise premiums to cover the cost of the law’s early provisions, like insuring adult children up to age 26, and federal and state regulators have largely proved to be accommodating.
But 2014 and 2015 are likely to be far more challenging, as insurers are forced to adjust to the law’s greatest changes, like providing coverage to everyone regardless of whether they have an expensive pre-existing condition. “I think they’re going to go through a winter,” said Paul H. Keckley, executive director of the Deloitte Center for Health Solutions, a research unit of the consulting firm Deloitte.
And while the slowing down of demand is good for insurers, at least in the short term, the concern is that patients may be tempted to skip important tests like colonoscopies or mammograms. The new health care law will eventually prevent most policies from charging patients for certain kinds of preventive care, but some plans still require someone to pay $500 toward a colonoscopy.
In recent times, insurers have prospered by pricing policies above costs, said Robert Laszewski, a former health insurance executive who is now a consultant in Alexandria, Va. The industry goes through underwriting cycles where the companies are better able to predict costs and make room for profits. “They’re benefiting from a very positive underwriting cycle,” he said.
“Maybe managed care is finally working,” he said. “Maybe this is the new normal.”
Still, he emphasized, health care costs, even if they are rising at 6 percent or 7 percent a year, are increasing at a much faster pace than overall inflation. “We haven’t solved the problem,” Mr. Laszewski said.
37 Comments so far
Show AllWhere's the outrage? 2009 had a heart attack, 5 days in the hospital, $125,000.00. June 2010 a back operation, followed by a heart attack,, hospital bill only $500,000.00. Our health care system is a farce, insurers walking away with 30 to40% of the healthcare dollar. Now they want double digit increases??? You work all your life to build a nest egg, and its wiped put in one sickness. Let's dump the insurers and go single payer. All the talk about sustainability, this system is wrong, and completely unsustainable.
Exactly.
Only the health care insurance companies benefit from the current system. Not the American people.
The government needs to change this.
The government needs to change. Period.
We, as in WE, need to change government.
Talk won't do it.
Just as Canadian single-payer was not initiated by Ottawa (its started in Saskatechewan), US single-payer will never be initiated in Washington DC.
The insurance industry recalled California Governor Grey Davis and installed the Terminator in 2003 to prevent California from being the state that started single-payer. Arnold subsequently vetoed two single-payer bills.
My brother had to have a quintuple bypass 2 weeks ago.....thank goodness he has that awful SOCIALISTIC HEALTHCARE called Medicare, or he told me he would not have even seen a doctor, as his previous health ins. had a $2000 deductible!
As patients entered his hospital, they could not miss all the posters with the ominous warning:
"ALL PROCEDURES PAYABLE IN FULL AT TIME OF SERVICE"
Low demand as an excuse for higher prices ... only in Anglo-American capitalism could anyone have the audacity to insult his customers by making such an argument.
There is no end to the cynicism and greed that typifies our hypocritical, grossly immoral health care system. I will die before I give a bloody nickel to any insurer, or to any provider that operates for profit and does not lobby strenuously for single-payer.
That's the truly amazing part of this article. The "free market" has been manipulated to such a point that no matter what the demand or supply is the price will always escalate, and we are all buying into that? Heads they win and tails we still lose. Our only alternative is an early death.
heads they win, tails you lose...its the American way !
Let's add this to the list of accomplishments of our "socialist" president.
Banks made record profits last year.
Oil companies made record profits last year.
Health Insurance companies made record profits last year.
Unemployment rages on and Obama's napping.
He cut or froze most domestic spending programs.
Programs for kids, the poor, and the elderly
have been cut and the New Deal is on the chopping block.
But he kept the Bush tax cuts for at least
two more years.
Obama is some man of the people, eh?
A real radical.
http://www.obamatheconservative.com/
People with life threatening cancer don't shop around for the cheapest oncologist, and when in any of a hundred kind of medial emergencies don't hunt around town for bargains in an ER. The economic term for such a situation is "natural monopoly", and what we are seeing is exactly what, "Free Market Theory" says should happen!
Call me overly cynical or melodramatic, but judging from the way Obama is already planning to throw 50-somethings like me under the bus with his plans for "reforming" Medicare and Soc. Sec. before I get old enough to enter them, I'd say the stealth plan really is to kill off most or all of us surplus, marginally-employed workers before we ever collect a penny of what we've been paying in for years to those two programs.
I know it's kind of morbid, but I've begun to start paying more attention to the local obits in my newspaper and begun doing a kind of class analysis of how more often I see death notices of what seem to be working poor, unemployed, and lower middle-class types ( based on what I can glean from the obit about their employment history and education). It sure seems like more folks of those classes are dying off at least several years earlier than I used to notice them expiring, and it's usually from chronic illnesses or something like heart disease or stroke, cancer, diabetes, etc. that might have gone undiagnosed for a while.
No big surprise when they were unlikely to have had generous insurance benefits and thus avoided doctor visits and expensive tests whenever possible.
All in order for his rich buddies to keep or even fatten their present tax cuts instead of having to help fund our retirement or old age health care. And the sad thing is that this mass "die off" plan will very likely succeed and take out most of us before those of us affected wake up and even try as a group to stop it thru any revolutionary action.
I agree fully with the other posters who like this to mass murder...too bad the villains won't have to worry about receiving what they really deserve.
Insurance companies are the symptom. The sickness is Capitalism. Until Capitalism is replaced with a humanitarian system there will be no real change. The Dems and the repubs both strongly support Capitalism. They are the enemy of the people. Voters who vote for dems/repubs are complicit in the deaths of 45,000 per year in this country and many more around the world.
Insurance companies are supposed to put profit and shareholders first. That is what they do. It is the bottom line that counts, not how many people are up on the obit page.
Start thinking about Socialism. It can't be any worse than what we have.
Define failure. Capitalism is failing 90% of the people living under it.
Cite ONE example of its failure. (Edit: Referring to the poster above who was talking about the failure of socialism "every time [and] without exception".)
Single payer. NOW!
That's right.
It's about time we "outsource" the services of the big insurance companies to an agency like the Medicare administration. Then, if the USA wants to continue spending more per capita on health care than everybody else at least we'll get good value for out money.
For about $700 a month I can get a policy from the only insurance company that works this part of rural eastern California, Blue Shield, I think. I haven't tried so maybe they consider some of my history "pre-existing" condition(s). I used to get my health care insurance from them, so they have my records. It doesn't really matter, because with this economy I can't even pay my mortgage on time. When I did have Blue Shield, I had a $5000 deductible and $2000 copay that renewed every January. Per capita expenditures in the U.S. on health care are $7000. That means that with my policy the insurance company, on average, pays nothing. The premiums are completely used to pay executive salaries, shareholder profits and paper pushing. I think people who are willing to participate in a company like that that is resulting in 50,000 people going to early deaths every year in the United States because of lack of access to health care belong in jail.
Look into CA PCIP - California Pre-Existing Conditions Insurance Program (run by the State, underwritten by BlueShield.) It costs a lot less than what you've described, and available if you are turned down by any individual health insurer (including BlueShield.) BTW--all you need is a script for migraine headaches, and you have a "pre-existing condition" to deny you private individual health insurance. (http://www.pcip.ca.gov/Home/default.aspx)
How interesting...
After all the crying about how the recession caused most of the healthy people to drop their insurance, and the insurance companies being stuck with all the sickest customers, they report record profits.
While I've grown to expect this sort of behavior from the literally heartless entities we call "profit-maximizing corporations," it's still disappointing.
We live in a Barbaric system. Nothing can be done collectively for the common good. We labor to make the rich masters richer, and those at the bottom and middle have no, no security. A mishap could take us to the gutter. We are base animals at the service of the Uberclass. Oh well, turn the teevee on and forget your suffering, there are plenty channels.... of crap.
Before the system became barbaric, the people became profoundly ignorant. That, apparently, enables the comfort and persistence of their illusions. Thus they, like the base animals you mention, remain docile as they are being harvested.
"There's good news and bad news from the historical Jesus. The good news: God says Caesar sucks. The bad news: God says Caesar is us."
~ John Dominic Crossan ~
It makes no difference if we're "base animals" who remain "docile." Species or temperament make no difference to us: we "harvest" [sic] them all, big or small, weak or mighty, harmless or dangerous, free-living or domesticated. We spare none, save the worst for last.
Indeed, John, below the veneer, we are them and they are us! The only thing lacking on our part is opportunity. We all have the "Mr. Hyde" within. Jesus knew this well.
If you walk into a small midwestern private medical practice, what you pay for medical care there is most likely paying for the several other employees in the office, while only one of them will have nursing credentials, the others employed to do the paperwork including the billing forms.
The use of the moniker, Obamacare, by Tea Party people is okay by me. The recent major health care finance act he signed does nothing to address the total stupidity of the plethora of billing systems by which doctors (and hospitals) are confronted. Single-payer along the lines of Medicare (signed into law in 1965 by Lyndon Baines Johnson), could have eliminated billions upon billions of dollars of medical paperwork involving nearly useless private medical "insurance" companies WHOSE actual contribution to real medical care is actually NEGATIVE.
This country went through at least a year while the evening news twisted the story and Obama totally excluded single-payer advocates from the "debate."
The legislation that Obama signed on "health care" also resolved NONE of the issues which make the United States less competitive internationally due to our riding a medical-model dinosaur while they are riding high-speed trains.
If you ask the doctors discreetly as well as the nurses and the office personnel, you will find that most will agree that this cannot be sustained. To say nothing of the sales people who show up at the doctors' offices drumming for Big Pharma.
If the cost of medical care is increasing at twice the rate of overall inflation, and if, let's say, medical care is 20 per cent of GDP, what happens to overall GDP inflation if we eliminate the "private insurance model" of "medical care" and in the process cut the cost of the latter by some 30 per cent at least? That 30 percent is merely the redundant paperwork.
Meanwhile, don't get me started on hospital practice in this country!
American hospitals are the barbarians awaiting you at The Gates of Hell.
-30-
Many more of us are postponing needed medical services because we don't have and can't afford insurance. It's a scam many of us have been locked out of as the economy moved on taking jobs with it. The whole idea of medical access being tied to full-time employment is criminal and even more so given the shortage of such employment. As in Dickens' capitalism, we're "surplus population."
Some call the u.s. health industry unjust, indifferent to suffering, venal, etc. It is murder. People are dieing.
Simply "collateral" damage incurred in this "class" war, while protecting the assets of the monied class.
To our American friends, good luck changing your health care system. You'll need it as the forces arrayed against single payer health care are immense and powerful. Contrary to popular opinion on the right, single payer health care is NOT socialism, single payer healthcare is how a civilized society looks after the needs of its people. It is also much less expensive and will deliver better results over the breadth of the population. Longer life, better infant mortality rates and virtually no bankruptcies due to health care costs - what societies wouldn't want this? Societies dominated by "private interests" - that's who......
Heck, 40% of health care delivery in the U.S. is already single payer, it's time for the next logical step.
This is when you can thank Dennis Kucinich for helping the corporations when he could have helped us.
“Maybe managed care is finally working,” he said. “Maybe this is the new normal.”
For whom? The "new normal" is the patient is going to pay more and receivie less or none in return, and see the looming mandate without price controls as another drain on their ever shrinking budgets? What exactly is "normal" about that? What intellegent person would agree to that if given the right to choose a different outcome?
The business plan deployed by the medical, pharmaceutical and insurance industries is best defined by the following excerpt from Wikipedia:
"Extortion, outwresting, and/or exaction is a criminal offense which occurs when a person unlawfully obtains either money, property or services from a person(s), entity, or institution, through coercion. Refraining from doing harm is sometimes euphemistically called protection. Extortion is commonly practiced by organized crime groups."
In a word: RACKETS.
Without them, of course, the U.S. would run the risk of experiencing social coherence. That might trigger a domino effect that could crash other vital industries; military, fossil fuels, etc. Sanity and decency are, you see, a serious economic inconvenience, so it is the business of your government to ensure they do not infect the national psyche.
Voting in elections does no good. Whether you vote for a Democrat or a Republican, the result is the same. Both parties and owned and operated by corporate money which can now flow unfettered, thanks to the Citizens United case. I stay home and dont vote for anyone. At least I dont waste my time. Nothing infuriates a pol more than those of us who wont participate in the charade. Thats why I stay home on election day and you should too.
The health insurers have it pretty sweet! I pay in my premium but I can't afford my co-pays and deductibles so they just keep taking my money and don't pay anything out.
Prior to the start of Medicare Pt D, Big Pharma raised the cost of drugs 400%.
SINGLE PAYER FOR ALL!! CAPS ON DRUG PRICES TIED TO INFLATION!!
The American worker is being raped by the Corporations and they will bleed us dry because Congress will turn a blind eye. Congress will turn a blind eye because they are being bribed to do so.