Surprise! Large Insurance Companies Are Raking In Cash, Thanks To Obamacare
Top health insurer Aetna reported boosted profits in the second quarter since Obamacare has been in effect as large insurance companies continue to win big from the health-care law.
Aetna’s earnings rose 2 percent to $548.8 million this quarter, compared to just $536 million this time last year, before the health-care law forced more Americans to purchase coverage, Forbes reports. The company raised its earnings projection for all of 2014 to $6.45 to $6.60 per share, up from $6.35 to $6.55 per share.
“Our results speak to the strength of our diversified portfolio of business and our ability to succeed across many fronts,” Aetna CEO Mark Bertolini said in a conference call Tuesday.
Aetna already offers plans on Obamacare exchanges in 16 states and Washington, D.C. and will expand into Georgia for 2015. They’re currently one of the biggest players in Obamacare exchanges nationwide. UnitedHealth Group, one of Aetna’s top competitors, took a slight hit in the second quarter but announced higher profits than it had projected. (RELATED: Top Insurance Company UnitedHealth Doing Better Than Expected Under Obamacare)
Large insurance companies are one of the biggest beneficiaries from the health-care law. While they continue to lobby against certain provisions — especially a hefty tax placed on each insurance policy a company sells — the individual mandate’s requirement that all Americans purchase coverage rapidly expands their customer base.
And insurers have been working closely with the Obama administration to make sure the law’s implemented in a way that’s friendly to them, if not to taxpayers.
Pressure from insurance companies may have played a role in the Obama administration’s decision to back down from a promise to keep Obamacare’s risk corridor program budget neutral, paving the way for a potential taxpayer bailout for insurers whose profits suffer due to the health-care law. (RELATED: Valerie Jarrett Personally Soothed Nervous Insurers Who Were Asking For Obamacare Bailout)
Aetna’s Bertolini has been especially suspicious of the health-care law’s effect on insurers, predicting massive premium hikes for months. In December, Bertolini predicted premium hikes “as high as 100 percent,” warning that the company had shared its concerns with “all the people in Washington that need to see it.” Bertolini more recently downgraded the projection to somewhere less than 20 percent.
Bertolini blamed the Obama administration’s “on the fly” changes to the health-care law’s implementation, specifically the last-minute extension of cancelled health care plans, for close to half of Aetna’s premium hikes for 2015, the Washington Post reported in April.