August 4, 2009 by billie789
Health insurance companies are “making record profits, right now.”
“President Barack Obama has often argued that health insurance companies need more competition, and he’s proposed a public option for health insurance to provide it.
There have been reports just over the last couple of days of insurance companies making record profits, right now,” Obama said during a prime-time news conference. “At a time when everybody’s getting hammered, they’re making record profits, and premiums are going up. What’s the constraint on that? … Well, part of the way is to make sure that there’s some competition out there.”
We wanted to know if he was correct that insurance companies are making record profits during one of the worst economic recessions on record.
It seems likely that Obama was referring to the latest earnings report from UnitedHealth Group, one of the largest publicly traded health insurance companies. The day before Obama’s news conference, UnitedHealth had announced unexpectedly robust profits that prompted the company to revise its annual earnings guidance upwards.
There are many ways to look at a company’s earnings, but Obama said “profits,” so we looked at net income, which is revenue minus expenses. For the quarter, UnitedHealth earned $859 million. But that’s not a record for quarterly net income. During the same period in 2007, for example, its net income was $1.23 billion.
We reviewed the income statements of the other largest publicly traded health insurance companies — WellPoint, Aetna, Cigna, Humana and Coventry Health Care — and found similar trends. Generally speaking, profits were higher during 2007 and 2006, before the economy began its slide. So Obama’s modifier “record” does not appear to be correct.”