Senator Feinstein on health insurer profits

Our partner Health Care for America Now (HCAN), the nationwide coalition that led the successful fight for health reform, released a report today showing that the five largest for-profit health insurance companies cashed in on double-digit rate hikes to record huge profit gains in the first three months of 2010 while providing skimpier benefits to hard-pressed consumers.

The five companies reported combined net income of $3.2 billion, a 31 percent leap from the same period in 2009. The combined commercial enrollment of the five companies fell by 2.85 million members in only 15 months. And among the 86 million people who remain enrolled in employer-sponsored and individual health plans, many saw their benefits shrink and their out-of-pockets costs grow.

California Senator Dianne Feinstein (D-CA), along with Representative Jan Schakowsky (IL-9), joined HCAN’s media conference call today, and they argued in favor of the companion bills they are sponsoring, the Health Insurance Rate Authority Act of 2010. This legislation would make health insurance more affordable for families and small businesses by providing authority to stop excessive rate hikes. The bills would empower the Health and Human Services Secretary to block unfair premium increases.

“I’ve come to the conclusion that the driving force in this sector of our economy is profits for shareholders—it isn’t good coverage for beneficiaries, and that’s a problem,” said Senator Feinstein.

As those of us in California know, WellPoint (through Anthem Blue Cross of California) was proposing increases as high as 39 percent until an independent expert retained by California officials unmasked the WellPoint rate hikes, concluding they were based on highly inaccurate data. “WellPoint is turning out to be the poster child for unbridled greed,” said Representative Schakowsky. “You’ve got to wonder about WellPoint’s rate calculations in other states.”

The health insurance industry argues that rising medical costs are to blame for runaway premiums, but rate hikes for years have greatly surpassed the growth of medical costs, wages and overall inflation. From 2000 to 2008, premiums for families enrolled in employer-sponsored health plans increased 97 percent, while rates for individuals in workplace health plans climbed 90 percent, according to the HCAN report. During that same period, private insurers’ payments to health care providers rose only 72 percent, medical inflation increased 39 percent, wages grew 29 percent and overall inflation climbed 21 percent.

Along with tough enforcement of the new health reform law enacted in March, the Feinstein/Schakowsky bills will put an end to unjustified rate increases that are turbo-charging profits, and it will keep health insurance companies from running roughshod over the financial security of the American people.

A replay of the teleconference is available at:
Replay of May 13 New Conference
To download a copy of the report, go to:
HCAN — Health Insurance Industry Profits Surge Again

Health Access California promotes quality, affordable health care for all Californians.

Leave a Comment

%d bloggers like this: