From the Huffington Post
Health insurance giant Aetna is planning to force up to 650,000 clients to
drop their coverage next year as it seeks to raise additional revenue to
meet profit expectations.
In a third-quarter earnings conference call in late October, officials at
Aetna announced that in an effort to improve on a less-than-anticipated
profit margin in 2009, they would be raising prices on their consumers in
2010. The insurance giant predicted that the company would subsequently lose
between 300,000 and 350,000 members next year from its national account as
well as another 300,000 from smaller group accounts.
"The pricing we put in place for 2009 turned out to not really be what we
needed to achieve the results and margins that we had historically been
delivering," said chairman and CEO Ron Williams. "We view 2010 as a
repositioning year, a year that does not fully reflect the earnings
potential of our business. Our pricing actions should have a noticeable
effect beginning in the first quarter of 2010, with additional financial
impact realized during the remaining three quarters of the year."
Aetna's decision to downsize the number of clients in favor of higher
premiums is, as one industry analyst told American Medical News, a "pretty
candid" admission. It also reflects the major concerns offered by health
care reform proponents and supporters of a public option for insurance
coverage, who insist that the private health insurance industry is too
consumed with the bottom line. A government-run plan would operate solely
off its members' premiums.
American Medical News, which first reported the
story, noted that this is not the first time the
insurance giant has cut the rolls in an effort to
boost profit margins. "As chronicled in a 2004
article in Health Affairs by health economist
James C. Robinson, MD, PhD, Aetna completely
overhauled its business between 2000 and 2003,
going from 21 million members in 1999 down to 13
million in 2003, but boosting its profit margin
from about 4% to higher than 7%."