As Republicans prepare to announce their health care agenda — which would provide a financial boon for the insurance industry — new data show that HMOs and other health insurers recorded an 86% profit increase in 2003, according to the nonpartisan Foundation for Taxpayer and Consumer Rights. California HMOs reported the highest aggregate earnings at $773.6 million (see below for an analysis of insurer profits).
In addition to HMOs, property and casualty insurers reported a 182% gain in the first quarter of 2004 compared to the same period in 2003. While the GOP consistently points to insurance litigation costs, Republican leaders have yet to address how the profitability of insurers has driven up the cost of coverage for all consumers. Profit data for health, property and casualty insurers was released this week by the independent market analyst, Weiss Ratings Inc.
“At a time when consumer costs are going through the roof, it is unconscionable that the GOP would ignore the vary insurance company profits that are uninsuring the insured,” said Jerry Flanagan of the Foundation for Taxpayer and Consumer Rights (FTCR). “The GOP has been crying for the insurance industry, and the industry has been making money hand over fist. Is this the party of Grand Old Profits? Will the GOP ever address the root causes of high insurance rates — outrageous insurer profits — or just continue to require consumers to pay the price?”
In 2003, Congress approved President Bush‘s Medicare prescription drug plan that guarantees billions of dollars to private insurers and pharmaceutical companies with no oversight of their rates. Democratic Presidential nominee Senator John Kerry has announced a plan to allow all Americans to have access to the same health insurance coverage available to the President and members of Congress, but neither President Bush nor Senator Kerry have not supported a comprehensive plan to address health care waste and profiteering.
Nationally HMOs and health insurers spend up to 25% or more of the health care premiums they collect on profit and overhead, including advertising and executive salaries.
“Because so much of our money goes to HMO profits and overhead costs, patients pay more for less care and many are forced to drop coverage altogether,” said Jerry Flanagan of FTCR.
The recent Medicare prescription drug law also guarantees a financial windfall for the pharmaceutical industry — the most profitable industry in the world — by barring the Medicare program from negotiating bulk discounts. Similar programs save the U.S. Department of Veterans Affairs and Canadian patients 30-60% or more on drug purchases. Pharmaceutical companies are major contributors to both conventions. Last week, FTCR chartered two train cars — dubbed the Rx Express — taking seniors from California, Oregon and Washington to Canada to buy lower cost prescriptions. Rx Express riders called for a U.S. prescription drug program open to all patients regardless of age.
According Weiss Ratings Inc:
** The nation’s HMOs nearly doubled their profits during 2003, earning $10.2 billion, an 86% increase over the $5.5 billion reported in 2002.
** For 2003, the nonprofit Kaiser Foundation Health Plan reported a $1.1 billion increase, which represents one-fifth of the industry’s net profit improvement.
** Blue Cross Blue Shield plans, as a group, produced a $5.4 billion profit, which is a $2.1 billion, or 63 percent, increase compared to the $3.3 billion profit recorded in 2002. The nonprofit Blue Shield of California experienced a 220% increase — or $314.2 million in 2003, up from $142.6 million in 2002.
Click here to view the Weiss Ratings, Inc. press release.
Among the health care policies that President Bush is expected to announce at this week’s Republican Convention is a plan to provide health savings accounts and tax credits which offer little or no protection from cost increases for the nation’s 44 million uninsured Americans. HMOs and health insurers support these policies because they guarantee premium income with no oversight of how much is allocated to profit.
“Instead of addressing the root causes of enormous cost increase that have resulted in a record number of uninsured Americans, Bush is expected to announce a plan that will provide tax credits and health savings accounts that benefit only Bush’s insurance company contributors,” said Jerry Flanagan.
According to the Center for Responsive Politics, President Bush has received $29.3 million from insurers and related contributors. Senator John Kerry has received $9.2 million.
“George W. Bush and John Kerry should both pledge to conduct a thorough review of insurer waste and profiteering on the order of the recent 9/11 commission. Out-of-control health and other insurance costs are one of the greatest threats facing all but the wealthiest Americans,” said Flanagan.
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The Foundation for Taxpayer and Consumer Rights (FTCR) is a non-profit and non-partisan consumer advocacy organization. For more information, click here to visit us on the web.