UnitedHealth’s 18% Profit Increase is Bad News for Patients & Business;

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Consumer Group Calls for Moratorium on Insurance Mergers

Santa Monica, CA — The Foundation for Taxpayer and Consumer said that UnitedHealth‘s 18% profit increase announced today is “bad news for patients and business owners because every dollar spent on overhead or handed out in profit means patients and employers pay more for less health care.”

UnitedHealth‘s increase in profit and 22% in overhead costs, pushed by a steep increase in insurance premiums, comes shortly after a merger with the California-based PacifiCare. The UnitedHealth and PacifiCare merger increased the size of the nation’s second largest health insurer but resulted in less choice for patients, lower payments for doctors and hospitals, and more waste in the health care system. Last year, WellPoint merged with Anthem to form the nation’s largest insurer with 32 million enrollees. Nationally, just 5 health insurers provide coverage for half of insured Americans.

Today, Foundation for Taxpayer and Consumer Rights called on the U.S. Attorney General to bar future mergers.

“Recent mergers have given the industry a strangle hold over the health insurance market. With fewer pressures for efficiency and no government oversight of rates, insurers have been given free rein to spend more of our health care dollars on overhead, profit, and administration. The last decade of HMO mergers has taught us that when fewer HMOs dominate the health care market, quality goes down, premiums go up, and patients get short changed,” said Jerry Flanagan of the Foundation for Taxpayer and Consumer Rights. “Already, 45 million Americans are uninsured because they cannot afford to pay the insurers’ ransom.”

“The health care system is moving to a privately-owned ‘Single Payer’ system where patients will have fewer choices, less leverage and higher costs. The number of the uninsured will surely increase has the insurers’ control increases. If we are going to have a Single Payer system, why not let the government pay a lot less for better care instead of turning the health care system over to private insurers that take 20% for overhead and profit,” said Flanagan.

Compared to the private market, public programs paid for by the government like Medicare spend just 2% on overhead.

The five insurers that enroll half of the 173 million Americans with private health insurance are:

WellPoint: 32.7 million
UnitedHealth: 25.7 million
Aetna: 13.7 million
Cigna: 9.7 million
Humana: 6.8 million
Total: 88.6 million

About 160 million non-elderly Americans have employer-sponsored health insurance, and another 13 million purchase insurance directly from an insurer or HMO.

UnitedHealth‘s fourth quarter consolidated net earnings increased to $870 million, up $131 million or 18 percent. Full year net earnings advanced to $3.3 billion, up $713 million or 28 percent over 2004 results. United spent only 78.2 percent of the health care premiums it collected on health care, the rest went to overhead costs according to company reports.

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FTCR is the nation’s leading consumer advocacy group. For more information, visit us on the web at:

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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