For-Profit Health Insurance Companies

Unlike other industrialized nations, the United States health care system is centered-around for-profit insurance companies and a mixture of for-profit and limited non-profit health care options. Dependency upon for-profit insurers contributes to the U.S. having the most expensive health care system in the world, consuming nearly 20% of the nation's GDP. By comparison, the public health insurance systems of the world's other industrialized nations are more effective and less costly.

The dominance, large profits, and life-ending practices of America's for-profit insurers are at the core of current efforts to reform health care. While insurance rates rise dramatically and the CEO's of America's largest health insurance companies pocket billions of dollars, the companies routinely deny coverage and refuse to pay expensive policy claims in order to increase profits. The result is the deaths of about 40,000 Americans a year (those unable to afford insurance, as well as those victimized by health insurer's refusal to pay policy claims), over one-half of all personal bankruptcies in the county (some three-fourths of the bankruptcies from insured individuals and families), and roughly 35,000,000 uninsured Americans.

National health reform efforts are targeted at ending free market insurance company death panels, reversing spiraling profits that come at the expense of customers, providing more affordable policies for individuals and families, and insuring approximately 95% of Americans.

For example, in 1993, insurance companies typically spent 95% of customers' premiums on medical benefits (this is called the "Medical Loss Ratio"). By 2009, many insurance companies were routinely denying policy claims in order to ensure that no more than about 85% of premiums were put back into medical benefits, while plowing the excess profits into executive salaries.

During the same time frame, Medicare has reinvested 97% of premiums into medical benefits. Yet in 2009, health insurance corporations posted a 56% average increase in profits (one posted a 91% increase) while dropping coverage for nearly 3,000,000 Americans. The health care reforms under discussion in early 2010 would deny excessive profits for for-profit insurers, mandating that 90% of profits be utilized for medical benefits.

Finally, the inherent shortcomings and problems of for-profit health insurance have also played out in the history of Medicare Advantage, a for-profit operated (and federally subsidized) alternative to government-sponsored Medicare. The for-profit insurance companies operating Medicare Advantage have spent tens of billions of Medicare (tax payer) dollars on executive salaries and executive retreats in Cancún, as well as enormous sums on marketing designed to lure more customers away from Medicare to the privately administered Advantage plans. At the same time, studies have revealed that the supposed benefits offered by Advantage are window dressing designed to maximize profits for the for-profit insurance companies.

Major For-Profit Insurance Companies in the U.S.

• Blue Cross/Blue Shield
  Founded in the 1920s, Blue Cross/Blue Shield (BCBS) is one of the oldest health insurance companies in the United States. It is also the largest health insurance company in the U.S., providing services to about 1/3 of insured Americans through approximately 40 insurance plans. In some states, BCBS effectively has a monopoly on health insurance. BCBS spends roughly 82% of premiums on medical benefits.
• United Health Group
  United Health Group, founded in the 1970s, offers health insurance plans to businesses and employers. United Health Group spends roughly 82% of premiums on medical benefits.
• Aetna
  Offering health insurance plans and services to individuals, families, and government employees, Aetna (founded in the 1860s) began offering group consumer plans in the 1930s. Aetna spends roughly 81% of premiums on medical benefits.
• Humana
  Humana specializes in offering group health insurance plans to employers. Humana spends roughly 84% of premiums on medical benefits.
• TriCare
  TriCare focuses on offering insurance to military servicepersons and their families.

For More Information:

U.S. Health Care: World's Most Expensive
Money-Driven Medicine (Book)
The Truth About Drug Companies (Book)
Medical Loss Ratio Statistics
More Medical Loss Ratio Information
The Problem With Medicare Advantage

More Health Care and Insurance Information