By Shelby Livingston
Modern Healthcare, February 18, 2020
The largest publicly traded health insurers grew profits by a combined 66% in 2019, driven by the massive mergers and acquisitions several of them completed the year before.
Those deals boosted the group of seven companies’ collective net income to $35.6 billion, according to Modern Healthcare’s analysis of company earnings reports. Combined revenue increased 31% over 2018 to $913 billion.
The combined growth of the companies’ top and bottom lines was propelled by deals with businesses other than insurance, including pharmacies and pharmacy benefit managers. These deals, which have escalated in recent years as insurers have sought to exert more control over healthcare spending, have made it harder to categorize the companies as insurers. Their operations are becoming much more varied.
“There are so many places where costs come from—the PBM, the hospital, the doctor’s office—and everything is separate from each other. The vertical integration is an attempt to control more pieces of the cost while also growing scale,” said Deep Banerjee, an insurance industry analyst with S&P Global.
Even insurers are reluctant to label themselves as such as they branch out into new businesses. Cigna Corp. CEO David Cordani has said he prefers the organization to be known as a “health service company.” Cigna acquired pharmacy benefit manager Express Scripts at the end of 2018.
The analysis of financial results included Anthem, Centene Corp., Cigna, CVS Health, Humana, Molina Healthcare and UnitedHealth Group.
The seven companies’ combined medical membership grew 1.7% to $165.4 million.
By Don McCanne, M.D.
Those of us who have been working hard to try to make our very expensive health care system work well for everyone should take a breather and step back and look at what has been happening to the business structure of our health care delivery system.
Seven investor-owned publicly traded health insurers now control almost a trillion dollars of our health care spending. They are expanding beyond the role of insurance and becoming “health service companies.” In the last year their revenue increased by 31% whereas their profits increased at double that rate: 66%! Their combined membership is 165 million – half of the U.S. population. Seven Wall Street companies!
Buried in our agenda for improving the health financing system to make it work well for all of us is the removal of passive investors – shareholders – from the health care financing equation since the primary obligation of publicly traded corporations is to maximize profits for the shareholders even if doing do is not in the interests of patients.
Fantasize that we elect a president and a Congress that finally has an epiphany recognizing that we must enact a single payer model of an improved Medicare for All. Okay, now turn around and implement it, starting with taking control of the financing of the medical-industrial complex now controlled largely by Wall Street corporations. How on earth are we going to drain that swamp?
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