From the Desk of Carl Levin U.S. Sen. (D-MI)
WASHINGTON D.C.— U.S. Sen. Carl Levin, D-Mich., delivered the following floor statement tonight regarding the insurance industry and the need for health care reform.
Mr. President, it should be crystal clear to all of us why the health insurance industry opposes reform so strenuously. It’s because the status quo is so profitable.
The massive profit announced this week by Humana Inc. illustrates this vividly. Humana’s third-quarter profit of over $300 million was a 65 percent increase over the same period a year ago. And Humana executives made no secret of the reason for this ballooning profit. The company’s president and CEO said, “Our government segment continued to perform well in the third quarter particularly in our Medicare business.”
It’s no coincidence that Humana is one of the biggest providers of Medicare Advantage plans. These plans, in which private insurers contract with the government to provide coverage to Medicare beneficiaries, were supposed to unleash the power of private-sector competition, lowering costs, improving service, and increasing benefits to our seniors.
It hasn’t often worked out that way. While some Medicare Advantage plans have performed well, Medicare pays, on the average, 14 percent more for Medicare Advantage beneficiaries than for those in traditional Medicare, and despite this increase in payments to Medicare Advantage plans, the Government Accountability Office (GAO) has found that seniors often face higher out-of-pocket costs in Medicare Advantage plans.
In fact, when the GAO studied the costs and the performance of these plans, it found that in 2005, those plans spent significantly less on health care for seniors than they had projected to. That lower spending on medical care for seniors led directly to windfall profits for these plans—$1.1 billion more in profits than the insurance companies had told the government that they expected to earn. That $1.1 billion is taxpayer money that should be providing treatment to our seniors, and instead is boosting insurance company profits.
Indeed, health insurance companies need no taxpayer help in reaping big profits. From 2002 to 2006, profits at publicly-traded insurance providers increased more than ten-fold. At the same time these companies are making massive profits, working Americans and their employers have endured year after year of much higher premiums, reduced benefits, and denials of treatment.
Our people need a sensible health care system. We cannot afford a system in which we are denied treatment because benefits are capped. Our nation cannot afford one in which they are denied coverage because they have a pre-existing condition. Our nation cannot afford a system in which the loss of a job means the loss of coverage and debilitating health costs. Our nation cannot afford a system in which even those with jobs and insurance face rapidly increasing premiums and out-of-pocket costs. Our nation certainly cannot afford a system in which their tax dollars boost the ever-higher profits at insurance companies, or in which premiums and out-of-pocket costs constantly go up, while coverage constantly shrinks or disappears entirely.
The Senate needs to put the interests of the American people against of the interests of insurers. We need to take up a health-reform plan that makes comprehensive, affordable health coverage available to every American, and helps keep insurance companies honest.
