Insurers Sacrifice Americans for Profit 

By Wendell Potter
PR Watch Health
August 1, 2011 

http://prwatch.org/news/2011/08/10929/health-insurers-sacrifice-americans-profit

Three of the biggest health insurers have announced quarterly
earnings in the past few days. If Americans were able to
eavesdrop on what executives from those firms tell their Wall
Street masters every three months, they would have a better
understanding of why premiums keep going up while the number
of people with medical coverage keeps going down. It only
takes three words, when you get right down to it, to describe
the real of those folks: profits over people.

CIGNA and Humana are scheduled to report earnings this week.
The three companies that have already spoken -- UnitedHealth,
WellPoint and Aetna -- earned a combined $2.51 billion from
April through the end of June, more than analysts expected.
On a per share basis, their earnings were up more than 17
percent on average compared with the second quarter of 2010.

Those results were no anomaly. The big for-profit health
insurers have been blowing analysts’ expectations out of the
water for several quarters in a row, even as the country
struggles to recover from the recession and the number of
Americans without coverage -- one out of every six of us --
continues to rise.

Based on their strong performance during the first half of
this year, UnitedHealth, WellPoint and Aetna have all have
raised their profit forecast for 2011. In other words, they
expect to earn far more this year than last year and far more
than even the most hopeful investors and analysts had
anticipated.

This has made Wall Street very happy indeed, as reflected in
the breathtaking increase in the companies’ share prices over
the past year. Since the end of July 2010, investors have bid
up the stock by more than 50 percent at four of the big five.
WellPoint, the laggard, saw its stock price increase by a
still-impressive 35 percent.

One of the secrets to achieving these results is what the
insurers euphemistically call 'medical management.' That
often translates into denied claims and denied coverage for
doctor-ordered care. The fewer claims you pay and the more
procedures you refuse to pay for, the more money is left over
for investors to put in their pockets.

Another important way they’ve been able to sustain such a
string of impressive earnings results is to shift more and
more of the cost of care to their policyholders. An
increasing percentage of these companies’ policyholders are
enrolled in plans that require greater cost sharing. Those
policyholders pay more for care out of their own pockets than
ever before while their insurers are paying much less.

The insurers are loathe to admit this, and have been making
up a host of incredible excuses to explain why they are
paying so much less for care than investors and analysts had
expected and so much less on a percentage basis than in
previous years.

Unending Excuses to Duck the Truth

At the end of 2010, executives told Wall Street that the
'utilization' of medical services was lower than in 2009
because the flu season last year was less severe. They
assured investors utilization would return to more normal
levels during the first quarter of 2011.

When it didn’t, the bad winter weather was to blame.
Insurance executives wanted us to believe that people were
not getting the care they needed because it was colder and
snowier than usual.  They assured us that medical spending
would jump again as soon as the weather improved and the ice
and snow melted.

Surprise! It’s August and people are still not going to the
doctor or picking up their prescriptions or checking into the
hospital as much as they usually do.

And what’s the excuse this time? It’s the economy, they say
-- even though the recession officially ended more than a
year ago.  At least UnitedHealth’s executives ackowledged
that, as AP reported, "health plans that make patients more
aware of the cost of care may be having an impact."

May be? Give me a break. And stop the double-speak. What
we’re so aware of is that we’re simply unable to get the care
we need because of the often sky-high deductibles of today’s
health plans, which insurers mislabel  'consumer-driven.'

Insurers' Code Words

Insurance industry executives are experts at talking in code,
which makes it difficult to understand just how much they
value profits over people. Occasionally, though,  they slip
up, as Aetna’s chieffinancial officer, Joseph Zubretsky, did
last Wednesday during his company’s conference call with
analysts.

Clearly concerned that investors might think Aetna was
willing to grow by adding people to its rolls who might have
substantial medical needs, Zubretsky disabused Wall Street of
that notion.
"We would like to have both profit and growth, but if you
have to choose between one or the other, you take margin and
profit and you sacrifice the growth line," Zubretsky said.

Whether he knew it or not, he was channeling WellPoint CEO
Angela Braley. In a 2008 conference call with financial
analysts, Braley had to acknowledge that her company had
spent more on medical care during the previous three months
than she and Wall Street had expected.

In the future, she promised, "We will not sacrifice
profitability for membership."

That was exactly what Wall Street wanted to hear.

WellPoint and Aetna and other insurers have demonstrated
repeatedly that while they will do all they can to avoid
sacrificing profitability for membership, they are quite
willing to sacrifice their members -- and the American public
-- for profits.

© 2011 Center for Media & Democracy 

[Wendell Potter is former Vice President of corporate
communications at CIGNA, one of the United States' largest
health insurance companies. In June 2009, he testified
against the HMO industry in the U.S. Senate as a
whistleblower. He is now the Senior Fellow on Health Care for
the Center for Media and Democracy in Madison, Wisconsin.]

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