Anthem, Centene, Cigna, CVS/Aetna, Humana, and UnitedHealth are bigger today than they were 12 years ago because of numerous mergers, acquisitions and a new love for tax dollars.
Very nicely done and sadly, all 100% extremely believable.
Another way the ACA was able to pull off the deception with voters was by demonizing professionals (physicians, nurses, therapists etc.) by telling everyone how they were all extremely overpaid. Physician payment was 9% of the entire healthcare spending pie back then- my guess is that it's dropped since then. No insurers have given any reimbursement raises except for Medicare.
1) is the $60B profit from all operations (you seem to imply that when discussing PBMs)?
2) If so, is it possible to break the profit down by source (insurance, PBM, etc.)
3) Is it possible to further break that down by private vs. government insurance policies?
Would all this be available in their annual reports or would I have to access additional (SEC?) financial disclosures? If you happen to have this information already broken down in the analysis you did for this piece or could easily break it out, would you be willing to share it? If so, I can get you my contact information (or if you could post here). I'm a one-man-show working on this project on my own time with zero financial or human resources so any help would be tremendously appreciated.
If these six companies are insuring ~150M people (wow!) & their combined profits are $60B (whether from insurance or all sources & I assume you're looking at net profits after taxes, etc.), then on average they're making a profit of $400/insured/year which I almost hate to say, but seems surprisingly low. If the $60B is from all sources then the profit/insurance policy is even less. $60B profit on $1.1T in sales is a net profit of <5% which would put it about in the middle of groceries (3%) and the oil companies (8%).
Furthermore, while $60B is no small sum, represents ~1.5% of all Healthcare spending. The PBMs are seemingly adding nothing in value and their profits are solely a result of driving up costs. Fortunately that issue seems to be getting some much overdue attention. It seems however, that the bigger problem with the "insurance" side (it's not really insurance per se) is more so the massive administrative burden it imposes on the overall "system" (or lack thereof) than the actual profit. Am I looking at this correctly?
Insurer Revenue = premiums. Premiums are determined by the medical costs for a population + insurer profit. Profit in these govt programs is usually capped at 15% - 20%. Medical costs come from providers. Bulk of medical cost increases have come from price increases from providers (rather than volume).
Insurers involved in govt programs might not be a bad thing. There's some debate but these programs (MA, managed medicaid, etc) are close to cost neutral and often provide members additional benefits.
I think the trends you point out in insurer revenue and profit are basically a function of price increases from providers as well additional lives under management due to insurers getting into govt programs. So while interesting to note, I don't think this article really gets at the root of the healthcare cost problem.
Insurer profits are mostly a symptom - not the disease.
Terrific analysis Wendell. We have a publicly funded healthcare “system,” but the taxpayers don’t get the benefits of it - like no out of pocket costs, comprehensive coverage, complete choice of providers. All this anti-government rhetoric about “choice” of private health plans is pure progaganda to protect profits.
You illustrate but one issue I see with Single-Payer (I realize you're a supporter): If it were to come about, I don't see a vote in Congress & the stroke of a Presidential pen putting these companies largely out of the insurance (& PBM?) business as the current M4A legislation would. I can't imagine you would either. These companies are too powerful. Wouldn't these 6 companies, in the same way they have with Medicare, Medicaid, Tricare, etc. cut a deal with a willing Congress in order to garner their support to let them "administer" Single-Payer for the government? The government cannot handle administering the current programs. There's no way they can administer HC for 330M people. We launder all the money through Washington & they pay the premiums. They "offer" to set up something like the FEHB for the whole country. Everyone gets to pick their plan & the feds pay the premium - Maybe it's means tested. Or we allow ESI to continue & employees get to shop the same plans but the employers pay for their employees. Sort of a national ACA type marketplace. Or worst case (for the insurance companies), they cut a deal to handle just the claims processing portion as they do now for Medicare, self-insured employers, etc. Endless/guaranteed government work isn't a bad way to make a living. I cannot imagine how disillusioned rank & file Single-Payer supporters would be to find the insurance companies still as a central component.
I have a different idea of how to reign in the costs & eliminate the coverage denials, etc. Once I publish my Plan, maybe we can discuss. I hope at least that you'll read the book with an open mind. It's a comprehensive & very detailed reform that I believe would solve all of the problems that Single-Payer proponents purport their solution will but I'm also not looking to put these companies out of business.
Again, I really appreciate the work you did putting this piece together. It is a unique perspective. I look forward to reading the rest of them on here.
Very nicely done and sadly, all 100% extremely believable.
Another way the ACA was able to pull off the deception with voters was by demonizing professionals (physicians, nurses, therapists etc.) by telling everyone how they were all extremely overpaid. Physician payment was 9% of the entire healthcare spending pie back then- my guess is that it's dropped since then. No insurers have given any reimbursement raises except for Medicare.
Great work & unique perspective. Thank you for doing this.
A few questions:
1) is the $60B profit from all operations (you seem to imply that when discussing PBMs)?
2) If so, is it possible to break the profit down by source (insurance, PBM, etc.)
3) Is it possible to further break that down by private vs. government insurance policies?
Would all this be available in their annual reports or would I have to access additional (SEC?) financial disclosures? If you happen to have this information already broken down in the analysis you did for this piece or could easily break it out, would you be willing to share it? If so, I can get you my contact information (or if you could post here). I'm a one-man-show working on this project on my own time with zero financial or human resources so any help would be tremendously appreciated.
If these six companies are insuring ~150M people (wow!) & their combined profits are $60B (whether from insurance or all sources & I assume you're looking at net profits after taxes, etc.), then on average they're making a profit of $400/insured/year which I almost hate to say, but seems surprisingly low. If the $60B is from all sources then the profit/insurance policy is even less. $60B profit on $1.1T in sales is a net profit of <5% which would put it about in the middle of groceries (3%) and the oil companies (8%).
Furthermore, while $60B is no small sum, represents ~1.5% of all Healthcare spending. The PBMs are seemingly adding nothing in value and their profits are solely a result of driving up costs. Fortunately that issue seems to be getting some much overdue attention. It seems however, that the bigger problem with the "insurance" side (it's not really insurance per se) is more so the massive administrative burden it imposes on the overall "system" (or lack thereof) than the actual profit. Am I looking at this correctly?
Insurer Revenue = premiums. Premiums are determined by the medical costs for a population + insurer profit. Profit in these govt programs is usually capped at 15% - 20%. Medical costs come from providers. Bulk of medical cost increases have come from price increases from providers (rather than volume).
Insurers involved in govt programs might not be a bad thing. There's some debate but these programs (MA, managed medicaid, etc) are close to cost neutral and often provide members additional benefits.
I think the trends you point out in insurer revenue and profit are basically a function of price increases from providers as well additional lives under management due to insurers getting into govt programs. So while interesting to note, I don't think this article really gets at the root of the healthcare cost problem.
Insurer profits are mostly a symptom - not the disease.
Thanks Wendell!
Excellent work Wendell
Terrific analysis Wendell. We have a publicly funded healthcare “system,” but the taxpayers don’t get the benefits of it - like no out of pocket costs, comprehensive coverage, complete choice of providers. All this anti-government rhetoric about “choice” of private health plans is pure progaganda to protect profits.
Is the 2010 figure of $2.6 Trillion spent real-dollar adjusted (inflation) in comparing the $4.3 Trillion spent 12 years later?
You illustrate but one issue I see with Single-Payer (I realize you're a supporter): If it were to come about, I don't see a vote in Congress & the stroke of a Presidential pen putting these companies largely out of the insurance (& PBM?) business as the current M4A legislation would. I can't imagine you would either. These companies are too powerful. Wouldn't these 6 companies, in the same way they have with Medicare, Medicaid, Tricare, etc. cut a deal with a willing Congress in order to garner their support to let them "administer" Single-Payer for the government? The government cannot handle administering the current programs. There's no way they can administer HC for 330M people. We launder all the money through Washington & they pay the premiums. They "offer" to set up something like the FEHB for the whole country. Everyone gets to pick their plan & the feds pay the premium - Maybe it's means tested. Or we allow ESI to continue & employees get to shop the same plans but the employers pay for their employees. Sort of a national ACA type marketplace. Or worst case (for the insurance companies), they cut a deal to handle just the claims processing portion as they do now for Medicare, self-insured employers, etc. Endless/guaranteed government work isn't a bad way to make a living. I cannot imagine how disillusioned rank & file Single-Payer supporters would be to find the insurance companies still as a central component.
I have a different idea of how to reign in the costs & eliminate the coverage denials, etc. Once I publish my Plan, maybe we can discuss. I hope at least that you'll read the book with an open mind. It's a comprehensive & very detailed reform that I believe would solve all of the problems that Single-Payer proponents purport their solution will but I'm also not looking to put these companies out of business.
Again, I really appreciate the work you did putting this piece together. It is a unique perspective. I look forward to reading the rest of them on here.