Health insurance companies try to convince people that sick, elderly, and/or poor people who actually need health insurance are ruining Obamacare for the rest of us. They want to deceive people into believing it is not the industry’s massive profits or the ridiculous salaries received by the executives that cause high insurance costs.
The health insurance industry has said the Affordable Care Act customers are making heavy use of medical services (many could not afford MD visits prior to Obamacare and went untreated for illnesses during that time), more than the industry anticipated, costing health insurance companies revenue and explaining next year’s premium increases.
Consumer Affairs reported on the deceptions of the insurance industry while they are making massive profits.
The refusal to expand Medicaid
Luckily for people in some states, policy analysts note that the premium increases won’t be distributed across the country equally.
“The story in California is really different,” Amy Adams, a senior program officer with the California Health Care Foundation, tells ConsumerAffairs. In California, premiums are only rising 13 percent next year, a relatively modest increase compared to the national average.
Adams and others credit the expansion of Medicaid with keeping Affordable Care Act premiums lower in California. They blame states that refused to accept federal money and expand Medicaid for bringing more sick people into the Affordable Care Act risk pool and driving costs up.
“We chose to expand Medicaid and we expanded it early,” which kept low-income people who may require more medical services out of the Marketplace risk pool, Adams says. In addition, California in 2014 banned insurers from selling plans that were less comprehensive than federal requirements, even as other states continued to do so.”That made one big risk pool in California. So there was a lot more security and stability for the insurers.”
In places like Texas, meanwhile, where state lawmakers have refused to take federal money to expand Medicaid, premiums are expected to rise by 30%, according to some estimates.
But the claim that corporations are losing money on Obamacare ignores the record-breaking profits and compensation packages that health insurers continue to collect.
Consider UnitedHealth, the nation’s largest health insurer that is leaving the marketplace next year. UnitedHealth claims that Obamacare has reduced its 2016 earnings by $850 million. While they might have $850 million less than they wanted, UntedHealth’s profits are still soaring.
In fact, UnitedHealth announced record-breaking profits in 2015, followed by an even better year this year. In July 2016, UnitedHealth celebrated revenues that quarter totalling $46.5 billion, an increase of $10 billion since the same time last year. And company filings show that UnitedHealth’s CEO Stephen J. Hemsley made over $20 million in 2015. To be fair, that is a pay cut. The previous year, in 2014, Hemsley took home $66 million in compensation.
“If you look at our Proxy, the Board lays out in extensive detail, in great detail, the thinking behind both CEO and executive compensation,” UnitedHealth executive Don Nathan tells ConsumerAffairs.
“At his request, Mr. Hemsley’s total compensation is below the median for CEOs in the Company’s peer group,” the proxy statement says, “even though the Board believes his performance has been outstanding.”
In other words, Hemsley is far from being the only health insurance CEO making millions of dollars every year.
Aetna spokesman T.J. Crawford wrote a brief statement to ConsumerAffairs describing the company’s losses under Obamacare: “As updated on our Q3 earnings call last week, we now expect a 2016 pretax loss in our individual products (on- and off-exchange) of approximately $350 million,” he said via email, otherwise directing questions to a company press release.
Thanks to the insurance industry’s combination of record profits in recent years and increasing premiums, people on both sides of the political aisle have criticized the Affordable Care Act as being more beneficial to the insurance industry than consumers, though politicians remain deeply divided on what a good, viable alternative would entail.
Meanwhile, Amy Adams, the program officer from the California Health Care Foundation, is optimistic that many consumers will not be stuck footing the bill for next year’s premium increases. She notes that people who qualify for government subsidies under the Affordable Care Act will not actually be paying the higher premiums. And neither, of course, will the people who receive coverage through their employer.
“I don’t think this a death spiral for the exchanges, I don’t think the sky is falling,” she says.
While the health insurance industry may be pointing their fingers at the poor and elderly, claiming they are the reason for rate increases. The actual evidence shows the companies are making record profits and the company leadership team is also making record profits. Will you believe the rich guys taking your money while they blame poor and elderly people?