The average stock price increase of these 5 Big Health Insurance Corps is 285% since January 19, 2001. And this 285% average stock price increase is deflated by Cigna's 42% stock price increase, which was burdened by several items unrelated to its very successful health insurance operations.
The magnitude of this 285% average stock price increase is particularly alarming when viewed in light of an S&P 500 Index increase of only 3% over this same time frame.
So, the stockholders and the top executives of these 5 Health Insurance Corps have clearly benefited greatly in the past just short of 12 years. But who did they receive this largesse from? Just who ended up getting their wealth transferred to these Big 5 Health Insurance Corp beneficiaries?
Well, clearly those who paid the unbridled, ever-increasing, unreasonably high insurance premiums. So, this would be the US citizens covered, US businesses they work for, and the US Government.
The Affordable Health Care Act makes a good down payment on a reversal of this transfer of wealth from the Big 5 Health Insurance Corps to US citizens covered, US businesses and the US Government. But clearly, a lot more needs to be done, especially when the US Debt level needs to be substantially reduced.
Thus, in all fairness, the Big 5 Health Insurance Corps should be ponying in a substantial amount of money, by a fair reduction in their insurance premiums charged in the upcoming US Fiscal Cliff and US Debt Grand Bargain debate. In addition, health insurance corporations, as well as many other insurance corporations, should not be allowed to deduct, for US federal income tax purposes, insurance claims before they are fixed in amount. Can you imagine asking retirees to have their Medicare benefits reduced and at the same time letting the Big 5 Health Insurance Corps get off Scot-free? If this were to happen, I think you would have an incensed US retiree base.
Below here are the stock prices of these Big 5 Health Insurance Corps at the beginning of the Bush 2 Administration, and also at the most recent date. WellPoint's earliest stock price in the Big Charts data system was on October 30, 2001, and thus its stock price on that date was used below.
| Stock | Stock | |||
| State | Price | Price | % | |
| HQs | 11-09-12 | 1-19-01 | Increase | |
| Big 5 Health Insurance Corps | ||||
| Humana | KY | $68.77 | $11.00 | 525% |
| Aetna | CT | $42.12 | $8.89 | 374% |
| UnitedHealth | MN | $52.90 | $12.89 | 310% |
| WellPoint (2001 Price is 10-30-01) | IN | $56.16 | $20.45 | 175% |
| Cigna | CT | $51.65 | $36.50 | 42% |
| Average Increase: All Big 5 Health Insurance Corps | 285% | |||
| S&P 500 Index | 1379.85 | 1342.55 | 3% |
OK, that's cool, but how did the stock prices of these Big 5 Health Insurance Corps do just during the Obama Administration? Well, just fine, up an average 111%, as compared with a 62% increase in the S&P 500 Index, over the same time frame. So clearly, the new Affordable Health Care Act hasn't hurt them one bit.
Well, what about the Health Insurance Corps just below the Big 5?
There are 6 of them which generated Pretax Income of at least $100 mil in any of the most recent 3 years.
These 6 Health Insurance Corps had their average stock price increase by an even greater 181% during the Obama Administration. So, they are also doing just fine under the new Affordable Health Care Act.
Below here are the stock prices of each of these 11 Health Insurance Corps at both the beginning of the Obama Administration, and also at the most recent date.
| Stock | Stock | |||
| State | Price | Price | % | |
| HQs | 11-09-12 | 1-16-09 | Increase | |
| Health Insurance Corps | ||||
| Big 5 | ||||
| Cigna | CT | $51.65 | $15.27 | 238% |
| UnitedHealth | MN | $52.90 | $25.50 | 107% |
| Humana | KY | $68.77 | $33.28 | 107% |
| Aetna | CT | $42.12 | $27.49 | 53% |
| WellPoint | IN | $56.16 | $37.89 | 48% |
| Other 6 | ||||
| WellCare Health Plans | FL | $47.10 | $11.63 | 305% |
| Coventry Health Care | MD | $42.91 | $12.66 | 239% |
| Amerigroup | VA | $91.36 | $28.32 | 223% |
| Centene | MO | $42.49 | $19.08 | 123% |
| Molina Healthcare | CA | $27.18 | $12.66 | 115% |
| Health Net | CA | $25.73 | $13.96 | 84% |
| Average Increase: Big 5 Health Insurance Corps | 111% | |||
| Average Increase: Other 6 Health Insurance Corps | 181% | |||
| Average Increase: All 11 Health Insurance Corps | 149% | |||
| S&P 500 Index | 1,379.85 | 850.12 | 62% |
Well, just how did the earnings of these Big 5 Health Insurance Corps come out in the most recent 3Q 2012?
From an Ongoing, Core Pretax Income basis, the Total Pretax Income was up a very healthy 14%, but some companies did well, and others, not so well.
Below here is the Ongoing, Core Pretax Income (PTI) of each of these Big 5 Health Insurance Corps for the 3Q 2012, and as compared with the 3Q 2011.
| PTI | PTI | ||||
| Pretax | Pretax | Increase | Increase | ||
| State | Income | Income | (Decrease) | (Decrease) | |
| HQs | 3Q 2012 | 3Q 2011 | Amount | % | |
| mils $s | mils $s | mils $s | |||
| US Big 5 Health Insurance Corps | |||||
| UnitedHealth | MN | 2,452 | 1,941 | 511 | 26% |
| WellPoint | IN | 1,026 | 1,045 | (19) | -2% |
| Aetna | CT | 810 | 751 | 59 | 8% |
| Humana | KY | 675 | 699 | (24) | -3% |
| Cigna | CT | 665 | 497 | 168 | 34% |
| Total all 5 | 5,628 | 4,933 | 695 | 14% |
But let's take a closer look at the Big 3 of the Big 5.
Here's the After-tax Net Income growth and the Earnings Per Share growth, both in the 3Q 2012 as compared with the 3Q 2011. Clearly, these three companies, and especially WellPoint and Aetna, are very successfully playing the heavy stock buyback financial engineering game to pump up their reported Earnings Per Share growth, their stock price, as well as their stock-based executive compensaton, which comprises a very significant portion of their true total compensation.
| EPS | ||||
| 3Q 2012 | Growth | |||
| Net | 3Q 2012 | Above | ||
| Income | EPS | Net Income | ||
| Growth | Growth | Growth | ||
| WellPoint | IN | 1% | 13% | 12% |
| Aetna | CT | 2% | 13% | 11% |
| UnitedHealth | MN | 23% | 28% | 5% |
