Lately, insurance company Anthem Blue Cross has been a political punching bag for politicians in California. Rep. Pete Stark took another right cross at its parent company, Wellpoint, along with Aetna telling both to lower their premiums in light of record mid-year profits.
"Wellpoint and Aetna are on track for great years with multi-billion dollar profits. Now it's time for them to return those windfalls to their enrollees in the form of reduced premiums," Stark said today in a press release. "With business booming, there is no excuse for any premium hikes or benefit cuts next year by Wellpoint or Aetna in their private sector or Medicare Advantage plans."
Wellpoint's subsidiary Anthem Blue Cross made headlines earlier this year when it attempted to hike premiums for its customers in California up to 39 percent. After a huge public outcry and testimony in Sacramento, it eventually relented. Anthem has recently filed a rate hike topping 20 percent.
Both companies announced mid-year earnings that vastly outstretched its costs. Wellpoint's profits rose 25 percent to $1.6 billion while it spent $1.21 billion less on medical care than a year ago. Aetna's profits were almost as sterling by bringing in $1.05 billion in profits--up 34 percent--while spending $557 million less on care. UnitedHealthcare also reported last week $471 million in profits.
A report in the Huffington Post attributes the profit-taking by health insurance companies as a sign of uncertainty over recently signed health care reform legislation and ultimately unfounded fears of a extremely harsh flu season last year boosting expenses.
Some economists believe large cash reserves amassed by corporate America is stifling a rebound of the national economy. Many companies are racking up large profits at the same time as reporting declining revenues. This may not be the case in regards to insurance companies whose business is predicated on uncertainty, but a Wellpoint executive says the companies inability to increase rates for its premiums could result in over $100 million in loses from its large California market.