Health Plans Seeing Solid Earnings

William R. Boyles, Editor & Publisher

Earnings from the five biggest insurers show that national health reform has had virtually no impact on performance, and there is no reason to believe it will affect private plans in 2010. The private market is undergoing a huge shift, but that has so far not affected the large firm financial results at all simply because the drivers are not in Washington. They are in the workforce.

True health reform is in the employer market. I just got back from three days of seeing what the latest innovations are for the large employer HR people, and it's quite impressive. But it's also clear that is it hugely limited -- some companies lead the way with the smallest premium rise in four years due to finally getting traction with their third-generation wellness programs.

But that's just the brightest of the bunch. The vast majority of big and small companies are clueless and drifting, unable to drive down premiums that are keeping them in a permanent recession. That means their premiums are essentially stuck in the plateau at 7-8% higher every year with 10-11% medical trend. If they were to adopt the best practices around them it would be different, but somehow that never happens. Employer mediocrity is rampant.

Health plans and insurers are the actual victims of the poor performance by U.S. employers since they have to price at the margin, and the margin is high. It's nice that some employers can drive down costs, but the sad fact is that corporate America is no closer to restraining national health spending. Critics can blame the carriers, but employers are the ones needing to change.

Subscriptions