Insurers choose between profits and members
Health plans say they’ll risk losing members to protect profit margins
By Emily Berry
American Medical News
May 19, 2008
The nation’s largest publicly traded health plans say they don’t plan to temper premium increases for the sake of keeping members on their rolls — particularly not while they are under pressure from Wall Street over what it sees as their disappointing earnings.
Wall Street analysts were shaken over the long-term prospects of the health plan business after bellwethers WellPoint and UnitedHealth Group, the nation’s two largest private-pay plans, reported less-than-expected profits from the first three months of this year.
…most say their risk-based commercial numbers — representing traditional employer health benefits — are declining or are not growing as quickly as anticipated. But health insurers say cutting premiums or reducing the rate of increase to keep customers would affect their bottom lines more than losing some members over premium hikes.
United CEO Stephen Hemsley told investors: “We continue to protect our margins. … We are committed to sustaining a quality business without taking shortsighted pricing positions.”
“We will not sacrifice profitability for membership,” WellPoint President and CEO Angela Braly told analysts during a conference call.
In trying to persuade investors that WellPoint’s problems are “fixable,” CEO Braly emphasized WellPoint’s market power, which she said gives it the ability to lean hard on its network doctors to accept lower reimbursement.
Consolidation over recent years is allowing insurers to raise premiums as well as continue to attack physician reimbursement as a means of attempting to keep profits up, said Susanne Madden, president and CEO of the Verden Group, a health care consulting group in Nyack, N.Y. “With consolidation and there being fewer players comes a certain amount of arrogance,” she said.
http://www.ama-assn.org/amednews/2008/05/19/bil10519.htm
Comment:
By Don McCanne, MD
So the private health insurance companies “will not sacrifice profitability for membership.” Yet the presidential candidates insist on keeping this industry in charge. Whose arrogance is this?