The Obama administration is using the recently announced 39% premium increase by Anthem Blue Cross as its starting point for new bipartisan talks on health reform. Will it matter in the long run?
Administration officials like Health and Human Services Secretary Kathleen Sibelius went ballistic on Anthem and its parent company, Wellpoint, in her public statements leading up to the new talks that are scheduled to start Feb. 25.
An example of her comments: “It remains difficult to understand how a company that made $2.7 billion in the last quarter of 2009 alone can justify massive increases that will leave consumers with nothing but bad options.”
Sibelius and other administration officials waved a report from the advocacy group Health Care for America Now that said the five biggest insurance companies had an average profit last year of 5.2 percent — for a combined total of $12.2 billion. This was an increase of $4.4 billion, or 56 percent, compared with 2008, according to the report, prepared by Health Care for America Now, a coalition of liberal and labor groups advocating for the passage of an overhaul of the health care system.
The five companies are WellPoint, Cigna, UnitedHealth Group, Aetna and Humana. Company officials countered with statements and letters noting that the percentage range for profits — 3% to 5% — is the norm for the industry, and that the bulge in some profits was caused by sales of assets, not premium increases.
The Health Care for America report contains other statistics and charges that no doubt will be mentioned again by administration officials and during the health reform talks. For instance:
- The insurance industry’s long-term strategy was to shift responsibility for the care of millions of older, sicker and lower-income customers to taxpayer-supported programs, like Medicaid and CHIP — some of which are managed by the insurance companies for a fee from the government.
- Although the insurance companies lost 2.7 million customers last year during the recession, they raised their premiums so much that they still made substantial profits.