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Does for-profit insurance ever play a positive role in health care?

Aetna profits sign

In case you needed yet another example of why insurance companies are awful…

According to an article in American Medical News, Aetna, one of this country’s largest private insurance companies, just announced that it will be raising prices for many of its large and small business customers in 2010.  They estimate that the company will lose between 600,000 and 650,000 members because of the price increase.  The most interesting part was how Aetna Chair and CEO Ron Williams explained the move in a phone call with investment analysts:

“The pricing we put in place for 2009 turned out to not really be what we needed to achieve the results and margins that we had historically been delivering.”

That’s right- 600,000 people will lose their insurance coverage next year, so that Aetna can keep delivering the same level of profits to it’s investors.

Whenever the insurance industry talks to the public, they downplay the role of their profits in health care spending.  They point to misleading statistics showing their profits only account for 1% of all health care spending, and make cute little graphs like this one:

dollar bill graph

But in private, talking to their investors, they sound a little different.  And it’s not just Aetna.  Last year,  Angela Braly, president and CEO of insurance giant WellPoint, the largest member of Blue Cross/Blue Shield, told investors and analysts that her company “would not sacrifice profitability for membership.”  In other words, maintaining profits would be more important than keeping people covered.

It sounds like their profits play a pretty important role in whether or not Americans can afford health care.  So in light of this, I have a question… do for-profit insurance companies do anything positive for our health care system?

Take the case of Aetna.  They had basically four options for saving money.  They could:

  1. Invest the money they take in from premiums so that it makes more money while it’s not being used to treat people
  2. Keep prices down by negotiating for lower payments to doctors and hospitals
  3. Pay investors less money in profits
  4. Raise prices, therefore dumping hundreds of thousands of members who are too expensive (i.e. too sick) to cover

So – did Aetna even try any of the first three options, or did it try those options and just fail miserably?  Was it unwilling or just unable to keep premiums down?

Robert Zirkelbach, a spokesperson for the insurance lobbying group AHIP, defends for-profit insurance companies, saying,

“Health plans are providing value-added services to people across the country, and the vast majority of people are expressing very high satisfaction with their health care coverage.”

What are those “value-added services” exactly?  Cool looking membership cards?  Free T-shirts?

When we ask whether or not for-profit insurance companies have any positive role to play in our health system, we’re not being facetious– it’s a serious question.  A while back I read the book, The Healing of America, by T.R. Reid.  He looked at a bunch of other industrialized countries that provide care as good or better than the United States at half the cost.  Many had short or no waiting lines, yet still covered every one of their citizens.  Some had totally government run systems, and some relied on highly regulated private, non-profit insurance companies.  But the one thing that every country had in common was that none of them had for-profit insurance for basic care.

So we really would like to know- do private insurance companies do something better than non-profit or private coverage that we’re just missing?  If you have an answer, leave it in the comments or email whatifpost AT gmail.com

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