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Aetna announced that it will deliberately cut 600,000 people from its insurance rolls to raise its profits next year:
In a third-quarter earnings conference call in late October, officials at Aetna announced that in an effort to improve on a less-than-anticipated profit margin in 2009, they would be raising prices on their consumers in 2010. The insurance giant predicted that the company would subsequently lose between 300,000 and 350,000 members next year from its national account as well as another 300,000 from smaller group accounts.
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Aetna’s decision to downsize the number of clients in favor of higher premiums is, as one industry analyst told American Medical News, a "pretty candid" admission. It also reflects the major concerns offered by health care reform proponents and supporters of a public option for insurance coverage, who insist that the private health insurance industry is too consumed with the bottom line. A government-run plan would operate solely off its members’ premiums.
Aetna is saying they want to make more money on each person they insure to please Wall Street, so they are raising prices. It doesn’t matter to them if this action causes them to lose some less profitable customers, customers that actually use their health care benefits. In fact, they welcome it. They are more than happy to let these people be priced out of the market, go uninsured, go bankrupt, or lose their lives. These people are not bringing in enough money for Aetna, so Aetna would rather not have them as a customer.
Aetna is following the insurance company playbook as articulated last year by Wellpoint CEO Angela Braly when she said, "We will not sacrifice profitability for membership." In other words, the insurance companies won’t sell health coverage to more people if it means they will make less money on each person.
They don’t care about coverage, they just care about profits. This is exactly why we must have a public health insurance option.
Health reform without a public option will not not work. The insurance industry playbook would still be on the table, and they would still find ways to cut people for more profit. Even with laws against insurance companies denying care, they would still find ways to do it.
The CBO confirms this with their analysis. Even with laws making it illegal for insurance companies to deny care, the CBO found that while the public option would keep down insurance premiums overall, it would attract less-profitable customers that the insurance companies don’t want and would refuse to insure.
There is no substitute for a public health insurance option that’s national and available everywhere on day one – no triggers. And indeed, the bill on the table in the Senate gets us there.
To those moderates who are holding out, don’t let the perfect be the enemy of the good. There may be some things in the Senate bill you don’t agree with, but that’s no reason to deny this country the reform it needs and wants. It’s time to allow this bill to come up for a fair, majority vote in the Senate.
(also posted at the NOW! blog)
I’m proud to work for Health Care for America Now
11 Comments
someone needs to understand the difference between not correctly accounting for their costs and “cutting 600,000 lives for profit”.
If Walmart raised their prices for food because their costs went up would we say they were “starving millions of Americans to death”.
Senationalism at its worst. There are plenty of places to go to bash insurers that are deservedly so. This is not one of them and you’re falling all over yourself Jason to make a point that doesn’t exist.
If an insurance company “cuts 600,000 lives” that cuts their income and hence their profit. Do you really think they intentionally do that? I thought that’s all they were in this business for is their profit???
This has nothing to do with not correctly accounting for their costs. Aetna said it was profitable this year, just not profitable enough. And so it decides it wants to shed 600,000 insured people from its rolls.
Yes, this is entirely about profit and increasing their margin. Click the first link in the piece, their CEO said exactly that.
Jason,
Why do you never answer my questions? If Walmart raises its food prices to increase its profit margins or to account for increased costs are they then guilty of “starving millions of Americans”.
Its funny I tried to link to the story that Huff Post had on there and the link goes nowhere. Some seeking alpha crap that I’m sure proves nothing. I saw on CNBC some time ago that Aetna expected this. They had their CEO on talking about something similar and he said they had under-estimated their costs and they would be fixing it in 2010.
And they can’t “SHED” 600,000 people. That’s not how it works. My God have you ever been in business?? They raised their prices just like I would as a manufacturer to compete. As I raise my prices to certain price points purchasers will either stay with me or decide to purchase elsewhere at a lower price.
To say they “SHED” is like again saying Walmart’s raising its food prices is starving the poor. Its idiotic.
No. To compare the food inustry to health care in this way is simply false. Their behavior is in no way similar. If Wal-Mart and other grocery stores raised their prices as severely as health insurance companies have raised premiums in recent years, there would be riots in the streets. Just like there would be if millions were denied access to food the way millions are denied access to health care. The health care industry has multiplied its profits several times over as more and more people have been kicked to the curb.
Right, they raised their prices expressly to shed non-profitable folks – as in folks who can’t pay. That’s what their CEO said, black and white.
they’re adjusting pricing on ALL members not just the sick. if they did that then you’d actually have something to scream about as opposed to this made up crap.
Want another example. Say there’s a drought in Florida and orange juice prices go up. Do we cry foul in that instance? Same thing is going on here. Personally i hope the required loss ratios go up to 85+% because when they do that and costs are STILL high and going up you’ll need to find another reason to complain. Like maybe a lack of cost containment.
Health care ain’t orange juice. I think that’s where our disagreement comes from.
Right. Except that’s exactly why we need Medicare for All. These vultures need to be put out of our misery. They perform no useful social function, that the Gvernment couldn’t perform at a savings of Hundreds of Billions annually.
for God’s sake don’t be an idiot its an example.
Say the cost to make WIDGETS goes up. The seller of Widgets can’t lose money perpetually, they need to raise the price. They can and should be forced to be more efficent (which this legislation does a crappy job of doing BTW) but at some point they will reach their peak efficency and costs will continue to rise. We need cost control as Jon Walker states in many of his posts.
visionbrkr – You see health care as a commodity, provided by the free market and subject to the same requirements and restrictions as any other private industry (like orange juice). Jason – Like me, you see health care as a basic right that the people should collectively provide for one another (like police and fire protection). There will never be agreement between these two sides as long as they start with these two vastly different assumptions.
Personally, I think it is immoral to view people’s lives as commodities to be bought and sold on the free market like widgets.
~~~There are plenty of places to use epithets to describe other commenters, and this is not one of them.~~~