Patients Pay for HMO Profits With Their Health; Blue Cross of CA Profit’s Increased 38% in 2002

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A report released today by the Center for Studying Health System Change found that as a result of unregulated cost increases and higher premiums, co-pays and deductibles patients are making fewer doctor visits and deciding to pass up needed care, according to the Foundation for Taxpayer and Consumer Rights. Meanwhile HMO profits are increasing dramatically — the independent market analyst, Weiss Ratings, Inc., released data this week showing that Blue Cross of California increased profits by 38% in 2002 while nationally HMO profits increased $5.5 billion.

The Center for Studying Health System Change found that health care spending by insured Americans is increasing at a slower rate as employers require consumers to pay more out-of-pocket for medical services.

“Breathtaking profit increases are fueling rising premiums and as a result many consumers have been forced to skip doctors visits and cut back on medical care,” said Jerry Flanagan of the Foundation for Taxpayer and Consumer Rights. “Patients are spending less because they are unable to afford basic health care.”

According to data released this week by Weiss Ratings, Inc., Blue Cross‘ 2002 net profits, $434.6 million, increased $119.8 million over 2001 levels — $314 million — a 38% change. The Weiss Ratings Inc. data is available at

According to the California Medical Association, health insurers divert as much as 25% of every health care dollar to cover profit, salaries, overhead and advertising. As a result of profiteering and disregard for efficiency in the non-competitive health insurance market, in 2002 insurance premiums increased 250% more than medical costs (Kaiser Family Foundation, California Health Benefits Survey, 2002, February 2003).

FTCR called for legislation to apply the same ‘prior approval‘ rate regime to health insurers that has saved California consumers $23 billion in auto insurance premiums since Proposition 103 was approved by voters in 1988. This regulatory process would require health insurers to justify any rate increases and bars excessive profits, overhead and other factors that drive up the cost of insurance.


The Foundation for Taxpayer and Consumer Rights (FTCR) is a non-profit and non-partisan consumer advocacy organization. For more information please visit us on the web at or

Consumer Watchdog
Consumer Watchdog
Providing an effective voice for American consumers in an era when special interests dominate public discourse, government and politics. Non-partisan.

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