As PricewaterhouseCoopers noted last year, the collective medical loss ratios of the seven largest for-profit insurers fell from an average of 85.3 percent in 1998 to 81.6 percent in 2008. ... "
Look at Philadelphia, where CIGNA, my former employer is based. The lion’s share of the insurance market in Philly is controlled by Independence Blue Cross and Aetna. CIGNA would love to be a big player in its own hometown, but it has never been able to scale up to be a serious competitor. It has some business there, but not much comparatively. If CIGNA cannot overcome the huge barriers to entering that market, what insurer can? That is just one of the reasons why the market cannot solve these problems on its own. The truth is that the market has no real interest in solving these problems, because there is no profit in covering all Americans as they age or get sick, which is simply part of the human condition. There is no financial incentive to opening the market to greater competition. The financial incentives actually run the opposite way. Fewer sick people equal greater profits.
That is why there is such determined resistance to the option of choosing a government insurance plan, like Medicare for all. The government would have incentives to reduce and manage costs, but it would not need to make billions in profits each year for investors. It would not need to rob premium dollars from consumers to buy high-priced lobbyists. It would not need to pay taxes on premiums. And, it would not have to pay a CEO $97,000 a day or even $10,000 a day. In this case, with Americans’ very lives at stake, it is emphatically not the case that the market is always right. The consequences for ordinary people are just too grave. Just ask yourself: How are these companies able to keep after-tax net earnings so high while everyone else’s costs of premiums and doctor’s bills are going up, up, up? It’s by leaving people out, and it’s time Congress fixed this.
Wendell Potter and Andrew Kurz
My name is Wendell Potter, the former insurance industry insider speaking out about how insurance companies have hijacked our health care system in service of Wall Street’s relentless profit expectations. I am joined in this letter by Andrew Kurz, a former chief financial officer for Wisconsin Blue Cross and Blue Shield who shares these concerns.
We stand together for immediately reforming the plainly broken U.S. health care system with its spiraling premium costs and harmful loopholes. Business as usual is taking a terrible toll on Americans, on government budgets, and on our nation’s ability to compete in the global marketplace. This is unacceptable and unsustainable.
We are writing at this crucial moment in response to some of the regrettably misleading arguments being made against health care reform. As a former executive who used to be on the inside of the health insurers’ anti-reform efforts, I can assure you the industry and its staunch allies will leave no ploy behind. You need look no further than this week’s news about Aetna’s layoff.
Perhaps it is just a coincidence that Aetna made its layoff announcement at this key moment in this debate. As you have no doubt heard, the company said it would reduce its workforce by 1.75 percent in “preparation” for possible health reform legislation as well as to consolidate real estate holdings. Aetna said this resulted in a $44 million “severance and facility charge.” Leaving aside the suspect timing of this announcement, it is important to put this news in context. The need to consolidate real estate holdings has nothing to do with health reform bills, and most companies have reduced staff due to the financial crisis of 2008. To us, tying this to health reform seems like pure hype.
Also putting this announcement in context is the fact that, in 2008, Aetna trumpeted that its revenues “increased 14 percent over 2007 to $31.6 billion.” See http://tinyurl.com/y9hfvw3 (at page 3). According to its 10-K filing with the SEC for 2008, Aetna’s net income after expenses, including taxes, was $1.38 billion. ... http://www.prwatch.org/node/8723