Insurers, Awash in Billions of Dollars in Record Profits and Excess Capital, Should Give Consumers Their Money Back

Washington, DC—With the health insurance industry reporting record profits while continuing to sock consumers with unjustified and excessive rate hikes, Health Care for America Now (HCAN) is demanding that insurers accelerate rebates required by the Affordable Care Act and immediately give back billions in premium overcharges to families and businesses.

“While America’s families and businesses are struggling in this tough economy, insurance companies are making money hand over fist,” said HCAN Executive Director Ethan Rome. “They’re making record profits by spending less on health care and playing financial games to boost their earnings and build up billions of dollars in cash reserves. Premiums have gone up 131% since 1999. The insurance companies should put an end to their price-gouging and roll back their rates right now.”

Some insurers in California, Connecticut and North Carolina have rolled backed rates, declared premium holidays or issued direct refunds. “The rest of the industry should do the same on a national scale,” Rome said.

According to an analysis by HCAN, the nation’s leading grassroots health care advocacy group, Wall Street-run health insurance companies generated huge profits in the first quarter of this year by charging more and spending much less on patient care.

At the same time, the insurance companies have quietly shifted billions of dollars to Wall Street investors through stock “buybacks” and built capital reserves substantially larger thanrequired by regulators. Meanwhile, despite insurance company claims that rising premiums reflect actual increases in medical costs, their rate hikes have consistently been twice the rate of medical inflation.

Under a consumer protection provision in the Affordable Care Act, the Health and Human Services Department estimates that insurers will owe up to 9 million customers as much as $1.4 billion in 2011 rebates payable next year. The new rule (medical-loss ratio) sets a minimum percentage of premiums (80% for individual and small group plans and 85% for large group plans) that insurers spend on actual medical care instead of wasteful overhead, excessive profits and bloated CEO salaries. Companies that fall short of the minimums must rebate the money to consumers.

“Families and businesses are barely hanging on while the insurance companies are swimming in cash,” Rome said. “There’s no reason to wait. The insurers should start paying consumers their rebates right now.”

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