Sen. Rockefeller Asks Insurers: What Share of the Money Goes to Profits?
By Susie Madrak Saturday Aug 22, 2009 2:00pmAh, now we're playing hardball! Maybe when Americans start to see how much money these guys are making, it'll get a rise out of them. Way to go, Jay:
WASHINGTON (Reuters) - A U.S. Senate Democrat asked the top 15 health insurers to explain what portion of premiums go to profits versus patient care, putting further pressure on the companies to explain their business practices as Congress considers sweeping health reform legislation.
In letters to the companies on Friday, Sen. John Rockefeller also asked for information about how insurers disclose financial practices to customers.
Earlier this week, senior Democrats on the House of Representatives Energy and Commerce Committee asked dozens of health insurers for details about executive compensation and other practices.
"Too often consumers are not getting a fair deal for what they pay, they are not getting the protections they deserve, and the insurance companies are awash in profit," Rockefeller, chairman of the Senate Commerce, Science and Transportation Committee, said in a statement.
The letters were sent to companies including UnitedHealth Group, Wellpoint and Aetna, the committee said.
Health insurers have come under attack amid a contentious debate about how to overhaul the U.S. healthcare system to cover the currently uninsured and cut costs. A key issue is whether the government should offer its own health insurance option to provide competition for the private companies.
America's Health Insurance Plans (AHIP), an industry group, said insurers provide detailed financial information to federal and state regulators. Health plans rank 35th among Fortune magazine's profitability rankings with an average profit margin of 2.2 percent, AHIP spokesman Robert Zirkelbach said.
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If that profit margin was accurate, shareholders would be selling off in droves, or screaming bloody murder about the CEO compensation packages. They're not, so AHIP is full of it.
It is about time someone asks the question and exposes the $$$$ in profit. It doesn't really matter how much because even one dollar is too much. Making $$$$ on others illness, disease or suffering is immoral.
The insurance companies are going to squeal!
... should have been: 'How do you determine premiums?'
To meet, or better yet, beat some analyst's estimate of earnings to keep investors happy? Or by denying payment for treatment, or perhaps by purging a policy holder wjo dared to get sick?
Wendell Potter on 7/10/09 on Bill Moyers:
"BILL MOYERS: But you had, all these years, seen premiums rising. People purged from the rolls, people who couldn't afford the health care that Cigna and other companies were offering. This is the first time you came face to face with it?
WENDELL POTTER: Yeah, it was. You know, certainly, I knew people, and I talked to people who were uninsured. But when you're in the executive offices, when you're getting prepared for a call with an analyst, in the financial medium, what you think about are the numbers. You don't think about individual people. You think about the numbers, and whether or not you're going to meet Wall Street's expectations. That's what you think about, at that level. And it helps to think that way. That's why you-- that enables you to stay there, if you don't really think that you're talking about and dealing with real human beings.
Check out this for videos of Wendell Potter on Bill Moyers.
Insurance companies hide behind their low profit margin. "See, we're not making much money; our profit margin is only 2.2 percent (or whatever)". The real question is, "What are your administrative costs?" and "How does that compare to Medicare or the VA?"
The insurance industry's costs of doing business are about 12% (including profits). The government can do it for 2%.
They want you think that they are only adding 2 cents to the cost of every healthcare dollar spent, but it's actually 12 cents. (12% of our $2 trillion annual healthcare spend is a lot of money.)
Knowing that, why should we pay private industry 6 times what it costs the government to do?
Don't "profit margins" get calculated AFTER bonuses get paid out? Pretty sure they do (but it's been awhile since I've done any accounting type stuff), so no matter what, that 2.2% could be gamed until eternity; companies simply have to pay out to their irreplaceable executives massive bonusi until they can make the profit margin come out to 2.2%
Still, I can tell you the response already. "These numbers are proprietary and revealing them would cause detriment to our operations."
That said, way to go Jay, just for axing the damn question.
You can be a CEO of a nonprofit insurer and still make tens of millions.
The question isn't profits, it's "What percentage of collected premiums does NOT get spent on healthcare, and how do you account for that?"
that Conyers/Weiner H.R. 676 WILL be scored by the Congressional Budget Office PRIOR to the House debate/vote.
There should be some pretty interesting fireworks in the House around the third week of September....
The answer is "It Depends."
It's like asking a movie producer to show you his books, when you're in for a piece of the take.
If he owes you, he's broke.
If he's promting another project, he's flush and the last one made MILLIONS!
It's all a shuck and jive. They make exactly as much as they WANT to make, depending on the accounting rules you use......
Because of bribery as free speech, the insurance execs and the political figures who question them are probably well acquainted with each other. Not much justice going on in government or business. Justice is for the non-lobbyists that make up the American people.
AETNA 2009 (6 months)
$17.284 billion income
$12.909 billion (75%) health care expenses
$ 3.016 billion (17%) administrative expenses
$ 1.359 billion ( 8%) PROFIT
WELLPOINT 2009 (6 months)
$30.566 billion income
$23.533 billion (77%) health care expenses
$ 4.708 billion (15%) administrative expenses
$ 2.315 billion ( 8%) PROFIT
etc., etc., etc.
These are posted financial results. It's anyone's guess how much manipulation and hidden profit there is.
17% + 8% = 25% of premiums paid to Aetna: administrative cost + profits
15% + 8% = 23% of premiums paid to WellPoint: administrative cost + profits
And I've heard more like 30% as the true industry average.
MediCare does it all for only 3-4%.
Support HR676 - "MediCare For All"
"Medicare, good enough for the 'deathers', good enough for me!"
Where did this data come from? I would like to see more of it.
... $7.724 admin espenses, $3,674 profits
give admin a litle more than just one co. one could save about $2B per company in admin and another $1.5B in profits.
But I claim, and these numbers have been floating around (credibly), that only 65% goes to health care and the rest to overhead, whereas in Medicare 97% goes to health care.
I just heard Ron Paul on Larry King: "Medicare is broke". But why is it broke? The General Fund owes it $billions. Pay that back, and then what do insurance companies do when income falls short? They raise rates. Where are the teabaggers for this. I don't see them in front of insurers cursing them.
People currently pay as high at $18,000/yr, which is estimated to climb to $22,000/yr by 2015. Would these same people holler and bitch if they got taxed for a premium for let's say $10,000/yr instead of forking over $18,000?
You betcha!
Several posts here hitting the mark. A recent Wall Street Journal article on what effect a "public option" would have on share prices indicated after tax profits of 2 to 4%, and about 84% paid out for medical services. They didn't mention the difference, which is the administrative expences.
4% after tax profit means 6% before taxes. So 12% goes for administration, which includes salaries far higher than any government employee, including the President. It also includes lobbying and political expence, as well as advertising. Advertising which the mainstream media is afraid of losing, so they say as little as possible about universal singlepayer, and never check up on the horror stories being spread about those programs in other countries.
I think the best argument for Medicare expanded to cover everyone is that it would be operational in a very short time. The various plans being tortured through Congress could take up to 4 years to create. More people losing health insurance every week will mean more bankrupcy triggered by medical costs, and those bankrupcies are a serious drag on the economy. Medicare for All would be a very powerful economic stimulus.
Health Care Insurance is a wholly immoral, unethical and inhumane scam. It's nothing more than legally sanctioned blackmail, fraud, extortion and profiteering. America is the only so-called "enlightened" civilized society in the world that values commerce and profits over the health and lives of it's citizens.
Today's Republicans are an abomination to the words and actions of Jesus Christ. Jesus Christ didn't charge the sick, lame and dying people he healed, but today's Republicans will kill anyone who wants to stop them from protecting the HUGE PROFITS of the exploitive den of thieves and money changers running today's Health Insurance Companies.
"In the episode, Jesus is stated to have visited the Temple in Jerusalem, Herod's Temple, at which the courtyard is described as being filled with livestock and the tables of the money changers, who changed the standard Greek and Roman money for Jewish and Tyrian money, which were the only coinage that could be used in Temple ceremonies. According to the Gospels, Jesus took offense to this (extorting profit from the people to hear the word of God), and so, creating a whip from some cords, drives out the money changers, and turns over their tables, and those of the people selling doves Matthew[21:13] And said unto them, It is written, My house shall be called the house of prayer; but ye have made it a den of thieves.21:14 And the blind and the lame came to him in the temple; and he healed them.21:15 And when the chief priests and scribes saw the wonderful things that he did, and the children crying in the temple, and saying, Hosanna to the son of David; they were sore displeased, Jesus said, "Heal the sick, cleanse the lepers, raise the dead, cast out demons. Freely you have received, freely give." (Matthew 10:8)."
Only one correction came to mind as I read your post...
It's not just Republicans. There are plenty of Democratic "Christians" taking big checks from corporate health care/big pharma etc.
They are almost ALL hypocrites.
Of course there are exceptions. Frankly I know of NONE who are Republicans. On the Democratic side probably many in the Progressive, Black and Latino Caucuses are Christians and walk the walk and talk the talk as to peace/justice and economic issues.
Let's face it, there aren't many Democrats we can name who are speaking "the truth", right?
Dennis Kucinich, Alan Grayson, Barbara Lee, Marcy Kaptur are a few who come to mind....
"How dare these libural loons question the right to make and the amounts of, lucre our
hard-working entrepreneursadvertisersearnsteal fromdedicated Americans with healthcare needssuckers who comprise my audience?"Expect it to be Monday's talking point de jour.
That said, gotta agree with Woody-- nothing meaningful will come out here. The accountants and secretaries for these conglomerates are probably in Atlantic City hotel rooms right now
discussing strategiescooking the books to read just what they need to say. No big-shot exec is going to have to wait 'til spring to get a new yacht...I think a more basic question is what value added service does insurance companies bring to warrant paying a profit. 86% of large employers are self insured, presumably because they have enough people that the risks can be calculated rather precisely.
Once the decision is made to cover the health care costs of the entire population of the U.S., then, I think that it should be decided whether to do it on a self insured basis for the same, exact reasons business self insure. I think that paying a risk premium against a large population is a superfluous expenditure. Like large corporations, the insurance companies could perhaps be called upon to administrate, but I suspect that there is no reason for these corporations to insure.
of the insurance companies. is it not American to keep secret the hand over fist profits these companies are making, the GOP might say. you Dems and your caring about 46 million Americans with no insurance, please. what about the hard-working insurance company executive, who works hard each and every day to see what claims he can reject, what doctor he can deny payment to, all the while making salaries beyond avarice. what a great country, this free market capitalistic one we have. (some of the above was sarcasm).
Some of my best friends were Libearal Arts Majors. It's really unfair to ask them to understand concepts,because,well,they never had to do so. (See major field of studies.) I write this after seeing the previous two comments.To summarize;the P and L statements aren't accurate .They are too low. This,of course runs into the generally low stock prices of big insurerers ,and the fact their ceos make less than the mean of similar sized companies. I've often suggested many left wingers 'know how not to know ' and thisnis perfect. Don't confuse ME with facts.
Now for the next.A dollar of profit is too much. In a sense this is the mirror of Omar's query about what vintner's purchase,"What half so precious as what they sell?" Still, if one assumes-as most of us do - health is our most prized possesion,why should someone be uncompensated for it? The people who make M and M's make money.People selling swimming equipment make money. Bicycle makers are ok with profits. SO,give me a little hit here.
By the way,could someone give a coherent reason of why anyone would under report profits. Recall,profits drive stock prices.Corporations like high stock prices.It makes them wealthier.
with the people who do operations, change dressings, clean bedpans, etc. making money. Insurance companies don't do any of those things moron. What insurance companies do is make profit out of taking a risk. Since sooner or later everyone must have health care there is no element of risk, it's a completely lose/lose proposition. UNLESS you game the system!! And that is exactly what health insurance companies have done. And whether you like it or not that practice IS going to come to an end very soon!
The biggest stock price driver in health insurance is actually the medical loss ratio (the percentage of premiums that they pay out for medical care), not profits. And shareholders expect that number to keep going down, or the stock price suffers. That's why it's gone down from about 95% (per Wendell Potter) in the nineties to about 80% today.
They should also be forced to disclose how they set their prices and how the insured's bottom line costs compare between companies. Price fixing collusion?
And they should be forced to provide all of their records on accuracy of claim payments, mistakes and analyses of dropped customers vs company liabilities.
We need to see the records of the death boards (of directors)
They, with profit aforesight, drop expensive clients for bogus reasons to raise their bottom line. Causing death to make money. I think there's a word for that.
They, and most big companies, screw us on the little things, too. How often have you had to go thru even tiny hoops to get payments, etc? Ever said it's not worth the effort. If these were truly random errors they would be split 50/50 in the customer's favor and the company's. Ever get a 2x payout? No charge where you know one is due? What about a missing form that YOU need to make 3,4,5 calls to sort out?
It's called an energy barrier. Just like a rebate. Too much time and trouble when all is said and done. Even $5 times 100K people nets 'em $500K. Peanuts, but a huge return on one lost form. And they never seem to pay me late fees. I've heard of this thing called the free market that is supposed to result in the best products, services and costs. It unfortunately breaks down badly when the product is absolutely essential and worsens as the number of competitors decreases.
Follow the money.
E Pleb Neesta
GODISNOWHERE
Blessed are the cheese makers.
the insurance companies didn't donate to Rockefeller as well as the telecoms did.
... the insurance companies will flip the bird to Rockefeller... and nothing will be done about it... remember these are Democrats in the majority!
do nothing to add value to Health Care! They do not cure diseases or repair hernias or relieve a painful joint. All they do is insert themselves in the middle of the process in order to suck out as much money/profit as possible.
Other 'advanced' and more 'civilized' countries than the US have recognized this decades ago. Corporations, and the sloths who run them, should not be allowed to get rich off of the suffering of others.
What we need to do is amend the decision/law which declared 'rights' to corporations. If they have no standing under the law, then they cannot operate as they have been.
is to create cash flow to invest. I would think the 2.2% profit would be what they keep out of their original cash flow. The money they invest would be an "expense," and the profit from that is accounted for elsewhere.
For first time this year, some people have been discussing something rational, the problem with insurance companies making a profit at our expense. All these health care discussions and public outcry so far have been for naught, run for political expediency, brainwashed by Glen Beck and Rush. When I see seniors, and potentially pregnant young girls, with placards, crying about health care reform and the influence of communism on america, I want to throw-up... Wait till these young girls get pregnant and have a complication in their child's birth...
Anyway, my thought is that health insurance is a public good, and not a private for profit game in the end. We are talking about people and their lives for god's sake. And to treat it like we are being optimized for salaries, bonuses and ultimately Wall Street numbers, is the problem. What Rockefeller is getting at is exactly this question, and really there is only one answer.
I don't think any other issue is more important in the health care debate than the insurance company issue. The insurance companies set the rates (not the gov.). The insurance companies determine who lives or dies in certain cases (not the gov.). The insurance companies don't insure when it is not in their interest (ever try to get coverage, when you have a missing kidney). The insurance companies can control doctor, pharmacy costs, etc, if it were in their interest, but it's not! All the things the supposed health care protesters have been rangling about, in not having a public option, are really issues we have with insurance companies. I don't see anybody protesting the insurance companies.
Let's just say, would you rather have a person behind closed doors at a private firm decide whether you are going to get the meds to live or die, or from a government entity. If you are choosing corps over govt in this case, you are highly misguided.
Apparently, a substantial portion of insurance company profits is derived from investments in, so help me, tobacco companies. This info from one of the big medical journals, via one of the news reder programs.
So--they invest in tobacco, which encourages smoking, so they can charge higher premiums for smokers, pre-exclude tobacco-related conditions, and make money on both ends, while having their profits subsidized by:
Yup, us taxpayers, who have to pay for the damages tobacco companies do at the lowest end of the income spectrum, where smoking is concentrated, and where the population is uninsured.
Hell, we already have socialized medicine and socialized insurance profits. So streamlien the process, make it single-payer, and acknowledge reality.
Please excuse any typos--my computer is printing posts in bar code, for some viral reason, and I cannot read what I type.
You should really show more compassion for these poor, indigent, suffering health sector CEO's and give them a tithe on top of your premiums, then get your hometown to pitch in and build them a golf course and if you feel generous, start a war in, say Canada and give them each ceo a corporate jet out of taxpayer's money.
No one will mind. Just ask George and Dick.
Socialized healthcare? Bailing out CEO's is socialized welfare.
I've had enough of republican lies, smoke andd mirror, bait & switch con man games. Face it... republicans don't give a rat's ass what Americans need.
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