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Top insurers reap billions as health costs soar

As the nation struggled last year with rising health-care costs and a recession, the five largest health-insurance companies racked up combined profits of $12.2 billion, up 56 percent over 2008, according to a new report.

By Noam N. Levey, Tribune Washington Bureau

Originally published February 11, 2010 at 7:48 PM | Page modified February 12, 2010 at 7:59 AM

WASHINGTON — As the nation struggled last year with rising health-care costs and a recession, the five largest health-insurance companies racked up combined profits of $12.2 billion, up 56 percent over 2008, according to a new report.

Based on company financial reports for 2009 filed with the Securities and Exchange Commission, the report said insurers WellPoint, UnitedHealth Group, Cigna, Aetna and Humana covered 2.7 million fewer people than they did the previous year.

The report also said three of the five insurers cut the proportion of premiums they spent on customers' medical care, committing relatively more to salaries, administrative expenses and profits.

Prepared by Health Care for America Now, a coalition of liberal advocacy groups and labor unions, the report was aimed at bolstering the drive by Democrats to complete work on a health-care overhaul, which insurers have vigorously opposed.

Industry representatives criticized the report's approach, noting that 2008 was a bad year financially across many industries, skewing the 2009 comparison.

"It is disingenuous to look at the profits at one company today compared to where it was in the depth of a recession," said Robert Zirkelbach, a spokesman for America's Health Insurance Plans, the industry's Washington, D.C.-based lobbying arm.

While all five companies indeed reported lower profits between 2007 and 2008, a Seattle Times review of financial statements shows that the profits of three of them — WellPoint, Cigna and Humana — were higher in 2009 than in 2007, before the recession. Outside factors such as the sales of assets can affect those numbers, however.

WellPoint's 2009 numbers were bolstered significantly by the sale of its NextRx pharmacy-benefit management business, which accounted for more than 40 percent of the company's profit.

The insurers' 2009 profits are intensifying pressure on an industry already under attack for raising premiums and denying coverage to millions of Americans.

"That's why we need health-insurance reform today in this country and why we are going to continue in the Congress to work on this until we see it through," said Rep. Rosa DeLauro, D-Conn., a leading advocate of the health legislation being pushed by Democrats on Capitol Hill.

In California, Anthem Blue Cross, a subsidiary of WellPoint, is facing growing scrutiny over its decision to increase premiums for individual health-insurance policies by as much as 39 percent this year for some consumers.

WellPoint on Thursday defended the rate increase in a letter to Health and Human Services Secretary Kathleen Sebelius, saying the rising rates reflect soaring medical costs and will average closer to 20 percent for most customers.

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