The eight largest insurers earned over $ 7 billion in the third quarter of 2018 and generated huge revenues of $ 132.4 billion. Eight listed companies earned over USD 21 billion, an increase of 31% compared to the same period last year. Are health insurance companies making record profits?
The nation’s largest health insurers are heading for record-breaking third-year profits, enriched in recent months by a persistent recessionary stance among Americans who are postponing or resigning from medical care.
The UnitedHealth Group, one of the largest commercial insurers, told analysts that the number of insured hospital stays has actually fallen so far this year. Cigna, another insurer, reporting his earnings last week, spoke of “low-level” medical applications.
Despite this, companies are still pushing for higher premiums, even though their reserve funds cover profits, and shareholders have been rewarded with new dividends. Many defend the proposed double-digit rate increases they charge, citing the need to protect against sudden increases in demand when people have more money for their health as well as the rising price of care.
Insurers and coronavirus
The country’s largest health insurers have responded by accelerating their usual practice of reducing payouts. UnitedHealthcare, along with other insurance giants, including Aetna and Cigna, insisted on significant pay cuts for doctors. Specialists, doctors, ambulance staff, and even nurses and technicians treating COVID-19 patients have seen salary cuts in recent weeks. Meanwhile, the same insurers have terminated contracts with anaesthesiology and neonatal care providers, also in the name of reducing costs. A recent survey by the American Society of Anesthesiologists found that 42 percent of anesthesiologists had contracts terminated in the previous six months, while 43 percent of respondents experienced a reduction of insurers’ payment rates by up to 60 percent.
With such aggressive lowering of interest rates, one would think that UnitedHealth and its peers also suffered significant losses in relation to their extremely profitable enterprises; in fact, it is estimated that coronavirus will cost insurance companies tens, if not hundreds of billions of dollars of additional costs. But so far it is not. In fact, last week on a call to earnings, UnitedHealth Group, the largest insurer in the country, announced that operating profits increased 3.4 percent to $ 5 billion in the first quarter, making this one of the most profitable quarters of this decade, although slightly higher than previous highest coronavirus sign in history. The company’s revenues increased by almost 7 percent to USD 64.4 billion. The company has even found enough money to continue buying back its own shares. This, of course, while millions of Americans have lost the health insurance provided by their employer due to mass layoffs.