Insurance Companies Spend Less on Care, Reap Large Profits

Lately, insurance company Anthem Blue Cross has been a political punching bag for politicians in California. Rep. Pete Stark took another right cross at its parent company, Wellpoint, along with Aetna telling both to lower their premiums in light of record mid-year profits.

“Wellpoint and Aetna are on track for great years with multi-billion dollar profits. Now it’s time for them to return those windfalls to their enrollees in the form of reduced premiums,” Stark said today in a press release. “With business booming, there is no excuse for any premium hikes or benefit cuts next year by Wellpoint or Aetna in their private sector or Medicare Advantage plans.”

Wellpoint’s subsidiary Anthem Blue Cross made headlines earlier this year when it attempted to hike premiums for its customers in California up to 39 percent. After a huge public outcry and testimony in Sacramento, it eventually relented. Anthem has recently filed a rate hike topping 20 percent.

Both companies announced mid-year earnings that vastly outstretched its costs. Wellpoint’s profits rose 25 percent to $1.6 billion while it spent $1.21 billion less on medical care than a year ago. Aetna’s profits were almost as sterling by bringing in $1.05 billion in profits–up 34 percent–while spending $557 million less on care. UnitedHealthcare also reported last week $471 million in profits.

A report in the Huffington Post attributes the profit-taking by health insurance companies as a sign of uncertainty over recently signed health care reform legislation and ultimately unfounded fears of a extremely harsh flu season last year boosting expenses.

Some economists believe large cash reserves amassed by corporate America is stifling a rebound of the national economy. Many companies are racking up large profits at the same time as reporting declining revenues. This may not be the case in regards to insurance companies whose business is predicated on uncertainty, but a Wellpoint executive says the companies inability to increase rates for its premiums could result in over $100 million in loses from its large California market.


Categories: economy, health care, insurance, Pete Stark

9 replies

  1. What a load of crap. I'm sure if the insurance companies were losing money you and Stark would be the first ones crying to bail them out, just like GM and Chrysler. PROFIT is not a dirty word, SOCIALISM is!!!


  2. He who knows nothing is closer to the truth than he whose mind is filled with falsehoods and errors.


  3. Insurance companies are the culprit in driving up health care costs. Thanks Steven.


  4. Anonymous, do not blame just the insurance companies. You should also include the hospitals, doctors, medical associations, schools, labor unions, lawyers and churches for supporting all the traffic will bear. These folks all believe that a profit above all is most important, not health. Just look around.


  5. F@#$ the Wall St. fat cats. They made a billion dollars and that's just half a year. I'm so sorry we have regulations in California that force you to lose less than 1/10th of your profits. Another thing, can you take down the picture of Hayashi smiling at me at the corner of the screen while I'm writing this. Creepy


  6. Oh you cry babies. Get over it. Profits are good. I'm glad the insurance companies are making a profit. That means there's money for research, development, investment and most importantly…..paying bills. Get off your high moral mules. If insurance companies were laying off people you'd be out there with your crocodile tears.


  7. Manuel

    Once again your stupidity is amazing. Research? Develoment? Insurance companoes dont do that, universitys, who's budgets are being cut do that. Development also. All insurance companies do is make money. We are the only country in the world that lets insurance companiies make money on health care. Everywhere else they are no profit.
    Our insurance company executives are getting rich on our backs.


  8. A lot of money is waisted on common sense warnings, like smoking tobacco is harmful, or sticking your finger in an electrical outlet or running your arm across a band saw.

    I saw get rid of the idiots and you'll see a major savings in this country. And the lazy, get rid of them too.

    There goes the Congress.


  9. Hey mysterious babooze, you're an idiot; universities don't do research and development into health care that's done by pharmaceuticals who are funding by insurance companies. BIG STINKING DEAL if there is a profit on healthcare. You obviously are so stupid to believe that medical advances are farted out of Pete Stark's ass. Oh and speaking of that old wrinkled ass, he was always against the pharmaceuticals getting tax incentives in Puerto Rico, never mentioning that it helped that territority immensely. So Screw Pete Stark and ANYONE who supports him.


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