Health Insurers Report Record Profits, Yet Raise Premiums, While People Postpone Care

By Editor, on May 14th, 2011

Kaiser Health News, which provides a summary of health policy coverage from more than 300 news organizations, is reporting from several sources that health insurance companies have realized record profits for the third year in a row, enhanced even more in recent months by consumers’ postponing or foregoing medical care. Yet, these reports confirm that these same health insurers are continuing to raise premiums substantially for consumers.

A summary of new reports by the New York Times, the Wall Street Journal, and The Hill, can be found at Kaiser Health News Daily Summary, As Consumers Postpone Care, Insurers Make Record Profits, for May 14, 2011.

“Yet,” according to reporting by the New York Times, “the [insurance] companies continue to press for higher premiums, even though their reserve coffers are flush with profits and shareholders have been rewarded with new dividends.” “Many defend proposed double-digit increases in the rates they charge, citing a need for protection against any sudden uptick in demand once people have more money to spend on their health, as well as the rising price of care.”

Nevertheless, the New York Times reports on several accounts from doctors, stating that patients are increasingly cost conscious, and are postponing or foregoing care, questioning the need for tests on grounds of cost, and generally not using the health insurance they have for fear of incurring more costs.

Some of this is due to higher insurance deductibles. According to the Kaiser Family Foundation, a nonprofit research group, in 2010, about 10 percent of people covered by their employer had a deductible of at least $2,000, compared to just 5 percent of covered workers in 2008.

According to the latest Milliman Medical Index, the total cost of health care for a typical family of four covered by a preferred provider plan (PPO), rose 7.3% to $19,393 in 2011. The per-employee cost more than doubled between 2002 and 2011. And the employee’s share of that cost has now risen to 39.7%.

The cost of outpatient care rose the most, at 10%, followed by inpatient care (8.6%), pharmacy costs (8%) and physician care (4.4%), over the last year alone.

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