Humana and Wellpoint – both major players in the Colorado health insurance market – lowered their 2008 earnings projections on Wall Street this week. In both cases, higher-than-expected claims volume is partially to blame. Humana’s earnings drop is mainly tied to claims with their Medicare prescription drug program, which the company says will reset after the end of the year.
Humana and Wellpoint (Anthem Blue Cross Blue Shield in Colorado) are two of our most popular health insurance carriers, and we feel very comfortable recommending either of them to our Colorado health insurance clients. But even with these top shelf companies, we’ve seen several double digit rate increases over the last few years. I understand that these are publicly traded companies that rely on the financial boost they get from investors. But in an industry where people’s lives are at stake, it’s hard to watch premiums increase year after year and know that shareholders are making a profit at the expense of policy-holders who desperately need to be able to afford their health insurance.
The primary responsibility of any health insurance company has to be claims payment for policy-holders. Increasing value for share holders must take a back seat to the health and well-being of the people who rely on the health insurance companies to take care of the finances of being sick. So while I don’t like seeing economic suffering in the health insurance industry, it is heartening to see that these two major health insurance companies are essentially paying more in claims and less in share holder profits right now. If health insurance carriers were posting record profits for their share-holders and simultaneously increasing premiums, there would be some well-justified resentment among policy-holders.
