First of all let’s be clear about one fact. Health insurance companies are “for profit” businesses. Here is a list of largest health insurers in the United States. They operate in most large metropolitan areas using different names and are incorporated separately. I believe that is done to hide their actual profits.
Blue Cross
CIGNA
Blue Shield
Aetna
Health Net
United Healthcare
Humana
Pacificare
California’s Department of Insurance does not have the power to control the rates that health insurers charge. The best that the department can do is strong arm the insurance companies to keep rate increases at a modest level.
The insurance companies have found a way to obtain the rates they want to charge without facing regulation of their rates. They announce to the subscribers and the media their plans to increase rates by 25% to 35%. Everyone screams “thieves” and the Department of Insurance says they will conduct a “review.” After that “review” is completed the insurance companies agree to raise their rates by 9% to 10% which is the rate increase they really wanted. The public is relieved that the increase was not the feared 25% to 35%.
Executives and shareholders of the five biggest for-profit health insurers, UnitedHealth Group Inc., WellPoint Inc., Aetna Inc., Humana Inc., and Cigna Corp., enjoyed combined profit of $12.2 billion in 2009, up 56 percent from the previous year. It was the best year ever for Big Insurance.
Imagine a society where no company earns a profit providing health care. The immediate impact would be a savings of $12.2 billion just by eliminating the “for profit” insurance companies. I wonder how many hospitals and other providers are “for profit.” While that amount won’t solve all the problems of high health care costs it is a beginning.
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