The New York Times’ Reed Abelson yesterday reported on the plight of insurers who are supposedly losing money thanks to the Affordable Care Act (ACA) and asks the existential question: “Can insurance companies run a viable business in the individual market?”
In short, yes.
More broadly, most insurers are not just “viable.” They are thriving.
Despite what insurance companies may say in print, the financial data paints a different picture. In the age of the ACA, the insurance industry is more profitable than it has ever been. Two of the nation’s largest insurers—UnitedHealth and Humana—saw their net incomes double since 2008.
Even the insurer profiled as “struggling,” still somehow manages to provide catered gourmet meals for their employees “a few times a week,” the paper reports. These are hardly the actions of a financially struggling company.
Compared to the biopharmaceutical industry, the contrast is even greater. The stock market performance of the five largest (by market capitalization) insurers far outpaced the five largest pharmaceutical companies from March 2010 through March 2016. Over that period, the increase of the best performing insurer, Cigna, nearly doubled that of the best performing pharmaceutical.
But to those that are paying attention, this shouldn’t be a surprise. Abelson wrote just a few years ago in the very same paper that “[insurance] companies continue to press for higher premiums, even though their reserve coffers are flush with profits and shareholders have been rewarded with new dividends.”
That is the most shocking thing of all. With insurers’ record profits, skyrocketing stock performance and billions of excess dollars stored in reserves, why are customers paying more than ever in premiums yet often can’t get access to the lifesaving medications they need? Often, it’s because insurers are using high coinsurance for prescription drugs to discriminate against those sickest among us.
The New York Times may spare a thought for those “struggling” insurers atop the S&P 500, but perhaps our minds should be focused on the patients paying more for less coverage.