There were 9 US Big Health Insurance Corps, which generated Pretax Income of more than $100 mil in either the 4Q 2011 or 4Q 2010.
How did they do?
Well, the Total Pretax Earnings of these 9 US Big Health Insurance Corps for the 4Q 2011 were precisely flat as compared with the 4Q 2010.
Kathleen Sebelius and the Affordable Health Care Plan both flat out rock for the 99%.
Below here are the individual Pretax Income results for the 4Q 2011 for each of these Big 9 Health Insurance Corps, along with a comparison with the prior year’s 4Q amounts.
..............................................PTI........PTI..........Increase
...............................................4Q.........4Q.........(Decrease)
.............................................2011......2010....Amount......%
...............................................(millions of dollars)
UnitedHealth(1)..........MN...1,935.....1,884..........51.........3%
Aetna...........................CT.....607........313........294.......94%
WellPoint.....................IN.....478........752.......(274).....-36%
Cigna............................CT.....455........545........(90).....-17%
Humana.......................KY.....313........174........139.......80%
Coventry Healthcare...MD.....144........236.........(92).....-39%
Wellcare Health(2).......FL......119..........36..........83......231%
Health Net....................CA......90........124.........(34).....-27%
Amerigroup.................VA......51........127.........(76).....-60%
Total all 9...........................4,192......4,191.............1........0%
(1) United Health 2010 PTI excludes Goodwill Impairment Charge and Business Line Disposition Charge.
(2) Wellcare Health 2011 excludes Gain on Debt Extinguishment.
Let me explain why it is so important for the country to have much more financially astute members in the US Congress, like Elizabeth Warren, who is running for the US Senate from Massachusetts. The US Senate Finance Committee, the US House Ways and Means, and the US Senate and House Committees handling Health Care all totally missed the following salient scenario when the Affordable Health Care Act was passed.
The Big 3 that dominate the US Health Insurance Industry are United Health, WellPoint and Aetna.....although with its continually and massively growing earnings of the past three years, Kentucky-based Humana, with US Senate Republican Leader Mitch McConnell pushing on its behalf, is getting close to making it the Big 4. Humana's Pretax Income has grown dramatically from $993 mil in 2008 to $2,235 mil in 2011, yeah, that's up 125% in just three years. I wonder how many of its health care insurance customers had their earnings grow like that in the past three years. I'm betting very few.
Back to the Big 3.
..................................................Average........Earnings
............................................Common Shares......Per
.......................Net Income.......Outstanding......Share
.........................mils of $s.......mils of shares
United Health
.....2011...............5,142..............1,087..............4.73
.....2005..............3,083..............1,333...............2.31
.....% Change........+67%...............-18%...........+105%
WellPoint
.....2011...............2,647................365..............7.25
.....2005..............2,464................626...............3.94
.....% Change.........+7%...............-42%............+84%
Aetna
.....2011...............1,986................380...............5.22
.....2005..............1,573................606...............2.60
.....% Change........+26%..............-37%...........+101%
A huge portion of the total compensation of the top executives of these Big Health Insurance Corps is driven by what happens with the Corp's Earnings Per Share, which is what drives the Market Price of the Stock. And frankly, this is also true of how the Board of Directors of these US Big Health Insurance Corps are compensated, who approve these US Big Corp stock buyback programs.
So what's with the massive difference between the growth in Net Income and the growth in Earnings Per Share of these 3 Big Health Insurance Corps?
It's all about massive stock buyback programs, which reduce the number of common shares and thus increase the Earnings Per Share.
Just how much have these Big 3 Health Insurance Corps paid out to buy back their own common stock in their most recent six years? Would you believe $52.8 bil? It's true.
.....................United
.....................Health.....WellPoint.....Aetna.....Total
.........................(billions of dollars)...............
2011...............3.0.............3.0............1.6*.......7.6
2010...............2.5.............4.4............1.6.........8.5
2009...............1.8.............2.6............0.8.........5.2
2008...............2.7.............3.3............1.8.........7.8
2007...............6.6.............6.2............1.7.......14.5
2006...............2.3.............4.6............2.3.........9.2
Total 6 years..18.9...........24.1............9.8.......52.8
* Aetna 2011 amount is 9 months Sept 2011 annualized.
Where did the money come from to buy back this stock?
From Insurance Premiums!
Warren Buffett very perceptively said many years ago that if you wanted to evaluate an insurance company, the best way to do it is to determine how the insurance company invests the insurance premiums it receives before it has to subsequently pay them out later in insurance claims.
These 3 Big Health Insurance giants are buying back their own common stock with the insurance premiums paid to them.
And who's the beneficiary of these insurance premiums being paid and used to buy back Health Insurance Corp common stock? Clearly, the top executives and Board of Directors of these Big 3 Health Insurance Corps, through the resultant gigantic increase in Earnings Per Share, and thus the related increase in the Market Price of the Common Stock. So clearly this financial engineering strategy results in a gigantic transfer of wealth between the insurance premium payers, the 99%, and the 1%.
To do a much better job of bending the long-term health care cost curve, the focus of annual insurance premium rate hikes of Big Health Insurance Corps should be tied to EPS growth, rather than to Pretax Income Growth, to Net Income Growth, or to only setting a percentage of Medical Benefits paid out to Insurance Premium Revenues.
And there clearly should be a maximum amount set for annual Common Stock Buybacks. Any Corp exceeding this annual maximum should be paying a financial fee to the US government for this incredible filthy greed. And this should apply to all Corps, not just to those in the Health Insurance Industry.
It is pretty clear that the vast majority of CEOs, CFOs, and Boards of Directors of these US Big Corps are not going to change their ingrained selfish greed, no matter how devastating it is to the 99%.
Given this, the only way US capitalism can properly work is for the US Government to take steps to quash these highly undesirable economic consequences to the 99%.
The Obama Administration at least attempts to govern for the entire country, both the 1% and the 99%. But the US Congress stops nearly every Obama Administration economic initiative on every front.
This is the main reason the approval rating of the US Congress is already so low, and is headed even much lower. Even though they publicly say otherwise, their legislative actions consistently show their allegiance to the 1% over the 99%.....certainly this is so for all Republicans in the US Congress, but it is also so for many Democrats in the US Congress. And so many well-intentioned Democrats, lacking the requisite financial expertise, frequently legislate for the 1% against the 99% on economic issues without realizing the consequences of their actions.
The only way for the country to get out of this deep unfair economic hole to the 99% is to remove from office in November 2012 so many of those in the US Congress.
And when severe economic problems are what is driving down the country from its historic preeminent position, it is essential to bring into office many new Congressional members who have superb financial expertise. Presently this financial expertise is pretty much devoid in the US Congress, and the 99% is paying the price.
