Obamacare Boosts Insurance Company Profits

A few years ago I had the privilege of spending a weekend at the Rockefeller estate at a small conference with Wendell Potter, the former insurance company executive who left and began to reveal the inner workings of how that industry works. He writes that Obamacare has increased insurance company profits.

But despite the worry, it turns out that the law that the insurance industry’s shills demonized has been awfully good to insurance-company investors.

Here’s how IBD’s Vance Cariaga reported UnitedHealth Group’s report on its first-quarter-2015 earnings last Thursday:

UnitedHealth Group delivered its best quarter in years Thursday as it benefited from new Obamacare customers, another strong Optum-platform showing and tame medical expenses. The nation’s No. 1 health insurer also raised its full-year 2015 sales and earnings guidance.

(Optum is a fast-growing division of the company that provides data and other services to its health-plan division, as well as to employers and other insurers.)

UnitedHealth Group’s revenues grew an eye-popping 13 percent, from $31.7 billion in the first quarter of 2014 to $35.8 billion in the first quarter of 2015. Net earnings on a per-share basis were even more impressive, growing 33 percent, from $1.10 to $1.46 per share.

One reasons for the glowing results was the fact that UnitedHealth added 570,000 new customers during the first quarter of 2015 from the Obamacare exchanges. And contrary to conventional wisdom, that the formerly uninsured Obamacare customers would overuse medical services, UnitedHealth executives said that wasn’t the case.

All of this was predictable. Indeed, I predicted it. Once the public option was dropped from the original bill, all that was left (other than the expansion of Medicaid) was government subsidies helping individuals purchase health insurance. That was the payoff for insurance companies to accept the ban on rejecting customers due to preexisting conditions and other similar changes. That meant millions and millions of new customers, most of them subsidized to be able to afford it. There was really no way that would not increase the profits of the insurance companies.

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What Are Your Thoughts?leave a comment
  • Alverant

    Some friends of mine who own their own (small) company complained about how the ACA tripled their insurance costs. They didn’t say how and I didn’t ask to avoid their ranting. It sounds more like the insurance companies are using the ACA to justify increasing fees they would have increased anyway.

  • A Masked Avenger

    Bill Substantially Written by Insurance Companies Benefits Insurance Companies

    News at 11.

  • Raucous Indignation

    Shocked! Shocked, I say! It’s almost like the insurance companies didn’t know that.

  • http://en.uncyclopedia.co/wiki/User:Modusoperandi Modusoperandi

    WELL OF COURSE SOCIALIZING SEVENTEEN PECRENT OF THE ECONOMY WOULD INCREASE CORPORATE PROFITS!!! THATS STRAIGHT FROM THE ALINSKY HANDBOOK!!!

  • Crimson Clupeidae

    Alverant, I’d be skeptical, but I understand wanting to avoid the issue. The company I worked for had their rates raised very slightly in the past year, but now that I’m purchasing my own insurance through the ACA, I’m barely paying more than my monthly premium when I was regularly employed (which means my contribution, plus my employer’s was much higher).

  • sharonb

    My grandfathered bcbs policy cost 248/ mo in 2013 my two meds were 50 ea for a 30 day. In 2014, still gf’d in, policy went to 278/ mo. and meds same price.

    2015, have to get ACA compliant version, rate goes to 690/ mo. One med stays 50 for 30 day, the other, premarin, which has been around since 1940s, went to 113/ mo.

    I’m kinda pissed, because the insurance is really just comparable, and I get no subsidies. Effing insurance and drug companies! !

    Only solace is I know of at least 3 personal friends who can now get affordable care via subsidies.

  • Kermit Sansoo

    Proving that Obama is a liberal – only liberals work for the insurance company. Real Americans work for the fossil fuel industry.

  • http://www.pixelated-reality.com Alareth

    The company I work for slashed all the hours for part timers claiming that under the ACA if we worked more than 25 hours a week they would be subject to heavy fines.

    Of course that’s an absolute lie, but they were adamant about it.