Top 5 Insurance Companies Raked in Billions in Profits in 2010

Health care reform can't come soon enough for Americans who are struggling to pay their insurance premiums.  Yet, the top five insurance companies in the nation, UnitedHealth, Wellpoint, Aetna, Humana, and Cigna posted profits of almost $12 billion in 2010.  This marks an increase in profits of 51 percent since 2008.  Something is very wrong with this picture.  Americans are paying more than ever for medical coverage, yet they are receiving less for their money.

A report published by Health Care for America Now details how insurance companies made such large profits, and it does not look good.  These top five insurance companies made more money by charging patients higher premiums, but providing them with less coverage.  Growth in spending on patient care has lagged for some time, but insurance companies have notably spent money on lobbying efforts, spending nearly $50 million on lobbying between 2008 and 2010.

Meanwhile, a sluggish economy coupled with significant job loss and high insurance premiums have left millions of families without insurance.  In fact, the premium for an average family has risen 131 percent since 1999.  Some families have received help from the government, but others have had to rely on charity to get the care they need. 

The average American received a pay raise of about two percent in 2009, while CEOs in the largest insurance companies received a pay raise of 167 percent in that same year.  In 10 years, these same CEOs have taken home nearly $1 billion in compensation.

Legislators in Congress are trying to change the way insurance companies charge premiums to cut down on exorbitant insurance company profits and increase the quality and amount of medical care Americans receive.  The Affordable Care Act, passed just last year, has established new rules that require insurers to spend at least 80 percent of premiums from people who buy coverage on medical services.  The minimum share for large business customers is 85%.  Companies that do not meet the minimum will have to rebate the extra money to the consumers.

The Department of Health and Human Services has proposed a regulation that would require health insurance premium increases of 10 percent or higher to be publicly disclosed and submitted for formal review to determine if the increase is unreasonable.  The regulation is still going through the notice and comment process, but could be promulgated as early as this year, if successful. 

If the goals of the Affordable Care Act are met, competition will be promoted, and insurers will be encouraged to do more to control health care costs and discouraged from charging unjustified rates.

While the government admits that some level of administrative cost is necessary, it says that what is happening now is out of hand, and consumers deserve to know what value they are getting for their premiums.