Health insurers saw big profits last year
Feb. 11, 2010
By NOAM N. LEVEY
Tribune Washington Bureau
WASHINGTON — As the nation struggled last year with rising healthcare 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 liberal healthcare activists.
Based on company financial reports for 2009 filed with the Securities and Exchange Commission, the report said insurers WellPoint Inc., UnitedHealth Group, Cigna Corp., Aetna and Humana Inc. covered 2.7 million fewer people than they did the year before.
The report Thursday also said three of the five insurers cut the proportion of premiums they spent on their customers’ medical care, committing relatively more to salaries, administrative expenses and profit.
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 healthcare overhaul, which insurers have vigorously opposed.
On Thursday, industry representatives criticized the report’s approach, pointing out that 2008 was a bad year for 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-based lobbying arm.
The 2009 profits are nonetheless intensifying pressure on an industry already under attack for raising premiums and denying coverage to millions of Americans.
Indianapolis-based WellPoint recorded net income of more than $4.7 billion in 2009, thanks in part to the sale of its NextRx pharmacy benefit management business, which accounted for roughly half the company’s profit.
That put WellPoint’s profit margin at 7.3 percent, the highest of the five big insurers. Margins at the four others ranged from 3.4 percent for Louisville, Ky.-based Humana to 7.1 percent for Philadelphia-based Cigna.
The industry’s improving financial fortunes are drawing more criticism because all but one of the companies, Aetna, achieved the better results at the same time they lost customers