So, what happened during the Obama/Biden Presidency?
Well, before the new Affordable Care Act (ACA) passed, this robust earnings growth continued.
But since the provisions of ACA have started to begin to kick in, there has been a dramatic drop in this robust earnings growth. Let me explain in more detail.
There are 5 Health Insurance Corps which dominate in the US:
UnitedHealth Group...UNH
WellPoint..................WLP
Aetna........................AET
Humana....................HUM
Cigna........................CI
And then there are 6 other ones which had Pretax Income of more than $100 mil in any of the most recent three years:
Coventry Health Care...COV
WellCare Health..........WCH
Amerigroup..................AG
Centene.......................CNT
Health Net...................HN
Molina Healthcare.......MH
The Big 5 Health Insurance Corps comprised a massive 91% of the total 2011 Pretax Income of all 11 of these insurance companies.
These Big 5 Health Insurance Corps had their Total Pretax Income increase from $12.0 bil in 2008 to $19.4 bil in 2011, an increase of a very robust 62%.
But to get to the real story here, you need to break down this earnings increase by year.
Before the new ACA began to start kicking in, these Big 5 Health Insurance Corps had their total Pretax Income increase by 23% in 2009 and by another 22% in 2010.
Then in 2011, the new ACA started to kick in and what happened?
The total Pretax Income growth in 2011 for these Big 5 increased by a much lower 8%.
And there was a similar result for the 6 other insurance corps. Thus, the total Pretax Income growth for all 11 of these Big Health Insurance Corps declined from 25% in 2010 to only 6% in 2011.
In deriving Pretax Income, I start with Pretax Income under Generally Accepted Accounting Principles (GAAP), and then exclude several clearly unusual very large items relative to Pretax Income, such as Special Legal Charges and Credits, Asset Impairments, Gains/Losses on Asset Sales, and Cigna's GMIB Fair Value Gains and Losses.
Clearly, with the ACA, the Obama Administration has started to make a major impact in reducing the country's health care costs.
Below here is the Pretax Income or Loss (PTI) of these 11 US Big Health Insurance Corps for each of the most recent three or four years.
| 1 Year | 3 Year | |||||
| % | % | |||||
| Change | Increase | |||||
| PTI | PTI | PTI | PTI | 2010 to | 2008 to | |
| 2011 | 2010 | 2009 | 2008 | 2011 | 2011 | |
| mil $s | mil $s | mil $s | mil $s | |||
| Big 5 | ||||||
| UNH | 7,959 | 7,383 | 5,808 | 4,624 | 8% | 72% |
| WLP | 3,958 | 4,354 | 3,874 | 3,122 | -9% | 27% |
| AET | 3,078 | 2,644 | 1,901 | 2,174 | 16% | 42% |
| HUM | 2,235 | 1,749 | 1,602 | 993 | 28% | 125% |
| CI | 2,204 | 1,925 | 1,594 | 1,072 | 14% | 106% |
| Total Big 5 | 19,434 | 18,055 | 14,779 | 11,985 | 8% | 62% |
| % Annual | ||||||
| ..Change | 8% | 22% | 23% | |||
| COV | 699 | 965 | 505 | -28% | ||
| WCH | 418 | 193 | 198 | 117% | ||
| AG | 310 | 437 | 201 | -29% | ||
| CNT | 175 | 154 | 138 | 14% | ||
| HN | 138 | 289 | 256 | -52% | ||
| MH | 130 | 89 | 38 | 46% | ||
| Total 6 Rest | 1,870 | 2,127 | 1,336 | -12% | ||
| Total all 11 | 21,304 | 20,182 | 16,115 | 6% | ||
| % Annual | ||||||
| ..Change | 6% | 25% |
