Two publicly-held health insurance corps dominate the US health insurance industry…UnitedHealth Group, HQed in Minnesota and WellPoint, HQed in Indiana. The pretax earnings of these two giants in the 2000s Lost Decade comprised more than 60% of the total earnings of the entire top six publicly-held corps in the health insurance industry.
In addition to these two giant corps, there are five other pretty large ones in this industry…CIGNA, Aetna, Humana, Coventry and Assurance.
In this study, I have dropped out Assurance because it decided to not disclose in its income tax footnotes in its annual reports filed with the SEC, the necessary state corporate income tax information…either its current state income tax paid or its state income tax element in its income tax rate reconciliation schedule.
Everyone is aware of how US Big Health Insurance Corps profits have gone to the moon in the 2000s Lost Decade. These six publicly-held health insurance corps generated Pretax Income in just 2009 of $19,114 mil, up an incredible 638% from the $2,591 mil earned a decade earlier, in 1999. Nearly all of these earnings were generated in the US.
But not everyone is aware of how these six Big Health Insurance Corps fared in helping their respective States solve their fiscal budget problems. Well, the record here flat out stinks.
For the last dozen years, these six corps paid an overall effective state corporate income tax rate of a dismal 2.43%, a 73% discount from the current 8.89% combined weighted statutory state corporate income tax rate of the six states these corps are located in.
The combined state corporate income tax loophole, due to the much lower state corporate income tax rate paid, was estimated to be an amazing $7.4 bil of state corporate income tax that was avoided by these six Big Health Insurance giants in the past dozen years. Man, these desperate States could certainly have used these massive amounts of lost funds.
…………………………………………….Effective
…………………..State………………....State…………......Current….State
……………………Tax…....Pretax……Tax….....SEC….Statutory...Tax
……………………Paid…..Income…..Rate…...State…….Tax….Loophole
…………………12 Years 1998-2009……....Location…Rate…..Amount
……………………...(mils of $s)………………………………..........(mils of $s)
UnitedHealth.1,014…..41,242…..2.46%.....MN…..9.80%.....3,028
WellPoint….......639….28,973…...2.21%.....IN…….8.50%.....1,824
Cigna………….....229…..16,190…...1.41%......PA…..9.99%......1,388
Aetna……….......462…..16,827…..2.75%.....CT…...7.50%........800
Humana……......205……6,099…..3.36%......KY…..6.00%........161
Coventry…….....237……5,175…..4.58%......MD….8.25%.........190
All Six Corps..2,786..114,506…..2.43%...All Six…8.89%.....7,391
It’s bad enough for Big Health Insurance companies to charge high premiums, to disallow so many insurance claims, and to be eventually getting the economic benefit of 30 million new insurance customers with the new Health Care Plan. But then for these Big Health Insurance giants to pile on by also taking advantage of many, massive State Corporate Income Tax Loopholes….that’s being clever by half.
The State Governors of MN, IN, PA, CT, KY, MD and other states should step up and correct this grossly unfair situation, which has so severely harmed many of their financially strapped State constituents.
And then just look at the below effective state corporate income tax rates paid by these Big Health Insurance Corps as compared with the top individual income tax rate in the same state:
.................................Corp Tax.......Top Individual
.................................Rate Paid.....Income Tax Rate
MN...UnitedHealth.......2.46%.............7.85%
IN...WellPoint..............2.21%..............3.40%
PA...Cigna....................1.41%...............3.07%
CT...Aetna...................2.75%..............6.50%
KY...Humana...............3.36%..............6.00%
MD...Coventry.............4.58%..............6.25%
I have to ask, how can it be fair for individuals in each of the above six states to be consistently paying such a substantially higher top individual income tax rate than the state corporate income tax rate these Big Health Insurance Corps HQed in their same state are paying? This comparative tax rate information has to make many people just furious!
Also, since US citizens are being hurt so severely by the actions of these Big Health Insurance giant corps, I think the Board of Directors of these Big Health Insurance Corps should be particularly vigilant in performing their required fiduciary responsibility of corporate oversight, and investigate the appropriateness of their Corps taking advantage of all of these many, massive amounts of State Corporate Income Tax Loopholes.
The many US citizens, in many States throughout the country, financially devastated by these Corporate State Income Tax Loophole shenanigans committed by the Big Health Insurance Corps should be outraged. Things like this shouldn’t be allowed to happen.
