Health Insurance Industry Defends Massive Profits, Complains It Is Being ‘Vilified’

By Igor Volsky Insurers have responded to the administration’s campaign against recent rate hikes by blaming increasing health care costs, provider cost increases and adverse selection (healthier Americans are dropping coverage) for their premium increases. To hear them tell it, the insurance industry is a low-profit industry that spends just one cent of every premium dollar on administration and strives to reduce costs by encouraging efficiencies. Insurers “do not deserve to be vilified for political purposes,” Robert Zirkelbach, a spokesman for America’s Health Insurance Plans (AHIP) told the AP:

For every dollar spent on health care in America, less than one penny goes toward health plan profits. The focus needs to be on the other 99 cents.

But the argument that insurers run a tight ship is misleading, on several counts, not least of which is the fact that insurers are planning to spend “more than $1 million” not on health care claims — as their justification for the premium hikes would suggest — but “to run television ads on cable stations nationwide beginning in the next few days to push back on the attacks on insurers.”

That $1 million ad fund will presumably come from the one penny that goes towards health care profits. But this too is misleading. Zirkelbach is clever enough to compare the private insurance industry’s administrative spending to national health care expenditures — 45 percent of which includes spending in Medicare, Medicaid and other public programs. In the context of total spending, insurers administrative costs may look small, but compared to the revenues of private insurers, administrative spending is seen as far more substantial. Insurers skim off 15-20 percent of premium dollars for administrative costs and profits which fund TV ad campaigns, Washington lobbyists, lavish company retreats and outlandish CEO salaries.

The top five earning insurance companies averaged profits of $12.2 billion, an increase of $4.4 billion, or 56 percent, from 2008. And in 2008 (the last year for which data was available), CEO compensation for these companies ranged from $3 million to $24 million.” Below is a partial list of insurer/CEO profits:

Insurer:	Company Profits 2009:	CEO Total Compensation 2008 Or Earlier:	CEO 5 Year Compensation:
UnitedHealth Group	$3.8 billion	$5 million	–
WellPoint	$4.75 billion	$4 million	–
Atena	$1.28 billion	$38 million	$77 million
Humana	$1 billion	$2 million	$56 million
Cigna	$1.3 billion	$10 million	$121 million

Insurer profits increased even in the midst of the current recession. Last week, during a hearing before the House Energy and Commerce Health Subcommittee, WellPoint admitted that it increased premiums to keep up with medical costs and maintain a 2% profit. The company’s 2009 fourth quarter net income “was more than $2.7 billion, a 727 percent increase from the fourth quarter of last year” — even as membership declined by some 4 percent.

Insurer profits are of course just one culprit for increasing premiums, but considering that insurers have been able to increase their returns by purging sicker Americans from the rolls and pulling out of competitive markets, the President’s strong rhetoric is more than justified. The Senate bill will start forcing insurers to earn profit by figuring out ways to deliver quality care more efficiently and they’re not very interested in accepting these changes.

In failed bid to salvage O'Keefe's credibility, Wallace attacks Media Matters

From Media Matters:

Wallace attacks Media Matters on conservative funding of videographers, ignores Media Matters' evidence

Wallace: O'Keefe "denies reports on left-wing blogs he got any money from conservative backers." Wallace said: "O'Keefe wants to set the record straight. He denies reports on left-wing blogs he got any money from conservative backers." During that statement, Fox displayed an image of Media Matters' home page followed by an image of a Media Matters item that documented statements by conservative media figures that they were raising money for O'Keefe's and Giles' legal defense or that they would be willing to do so in the future.

From Fox News Sunday:

Wallace ignored reported admission by conservative investor -- noted by Media Matters -- that he funded an earlier O'Keefe video released this year. In attacking Media Matters, Wallace ignored a September 22 Village Voice report -- noted by Media Matters -- that the spokesperson for conservative investor Peter Thiel acknowledged that Thiel had contributed "about $10,000" to an earlier video that O'Keefe released in February 2009. As Media Matters noted, The Village Voice reported that Thiel's spokesperson denied that Thiel had "any involvement with the ACORN videos." [The Village Voice, 9/22/09]

Wallace ignored evidence -- documented in Media Matters item Fox displayed -- of conservatives currently fundraising for videographers. As Wallace uncritically repeated O'Keefe's denial that "he got any money from conservative backers," Fox showed an image of a September 25 Media Matters item headlined, "Hannity, Breitbart lead conservative media fundraising for activist videographers sued by ACORN." Wallace completely ignored the evidence Media Matters included in the item, which consisted of the below statements -- some of them made on Fox News -- by conservatives that they were fundraising or would fundraise for O'Keefe and Giles.

• Hannity: "Hannah, if you get in trouble ... we can help you. We'll put out the word." After interviewing Giles and her attorney about the lawsuit, Sean Hannity stated, "Well, listen, Hannah, if you get in trouble and you need the lawyer, I'll tell you what, we can help you. We'll put out the word. I'm sure there's a lot of people that may want to help you with a legal defense fund. And if you get to that point, let us know, and we'll be glad to bring you back on." [Hannity, 9/24/09]
• Breitbart on O'Reilly: "We will be advertising Hannah and James' legal defense fund." After Bill O'Reilly asked, "[D]o you have lawyers helping you with it because, you know, this is expensive," Breitbart stated, "We're -- we're working on that right now. And I want everybody to know that we will be advertising Hannah and James' legal defense fund at BigGovernment.com. The amount of -- the responses so far in e-mail form are overwhelming." [The O'Reilly Factor, 9/24/09]
• HotAir's Allahpundit: "Dig deep: Hannah Giles defense fund launches." In a September 24 HotAir.com blog post titled, "Dig deep: Hannah Giles defense fund launches," Allahpundit wrote that Giles' father -- conservative activist Doug Giles -- "sent out a blast e-mail about it a little while ago and I'm told the link's posted on his Facebook page, so fire away. Not that she'll need the money: The lawsuit's weak, the jury will be on her side, and apparently Hannity's set to beam this link out to America on tonight's show, which means she'll be swimming in dough come morning." Allahpundit further promised, "I'll post the info for O'Keefe's defense fund once it's available." HotAir.com was founded by Fox News contributor Michelle Malkin. [HotAir.com, 9/24/09]
• NewsBusters: Breitbart "Reveals Defense Fund Initiative." Promoting Breitbart's O'Reilly Factor appearance, the Media Research Center's NewsBusters blog quoted Breitbart's promotion of the legal defense fund and included a link to Breitbart's BigGovernment.com. [NewsBusters, 9/24/09]

Wallace ignored Fox reporting that some ACORN employees "did the right thing"

Wallace: O'Keefe "says he'll release all the tapes soon to show if any ACORN offices did the right thing." Wallace reported: "O'Keefe wants to set the record straight. ... And he says he'll release all the tapes soon to show if any ACORN offices did the right thing." Wallace then added, "Why not release all the tapes at the start?" and proceeded to air video of O'Keefe saying, "We knew that they would lie and they would say, 'Oh, you've got nothing,' or 'You're dubbing your voice in.' But you release a little bit at a time, and they get caught in their lie."

Wallace ignored Fox's own reporting -- backed up by police -- that "some" ACORN "workers did the right thing." On September 22, Fox News' Megyn Kelly reported: "[I]t appears that not every ACORN worker did go along with it. ACORN had been saying that the purported pimp and prostitute had failed in certain offices to actually convince the ACORN workers for help, and police in California say one ACORN worker at one office out there did, in fact, contact them after the filmmakers approached him about this human smuggling ring, or this trafficking ring. That worker realizing several days later that the whole thing was a hoax, but as ACORN pointed out when this thing first broke, some of their workers did the right thing."

Indeed, the Associated Press reported:

Police say a worker with the activist group ACORN who was caught on video giving advice about human smuggling to a couple posing as a pimp and a prostitute had reported the incident to authorities.

National City police said Monday that Juan Carlos Vera contacted his cousin, a police detective, to get advice on what to with information on possible human smuggling.

Vera was secretly filmed on Aug. 18 as part of a young couple's high-profile expose.

Police say he contacted law enforcement two days later. The detective consulted another police official who served on a federal human smuggling task force, who said he needed more details.

The ACORN employee responded several days later and explained that the information he received was not true and he had been duped. [AP, 9/22/09]

Wallace ignored report that ACORN employee says she attempted to help videographer "prostitute" go to women's center. Los Angeles Times media critic James Rainey reported:

And visits to other ACORN offices have gone almost entirely unmentioned. Lavelle Stewart, a fair-housing coordinator in the group's Los Angeles office, told me this week that she tried to get the "prostitute," who claimed she had been beaten by her pimp, to go to a women's center.

"The fact she was not taking the help I offered her made me think something was not right," Stewart said. "It raised a red flag." [Rainey, Los Angeles Times, 9/23/09]

Wallace relayed O'Keefe's denial that Philly ACORN "called the cops" without noting ACORN released police report

Wallace: O'Keefe "denies" that Philly ACORN "called the cops." Wallace reported: "O'Keefe says in a few days he'll release video of their undercover visit to ACORN's Philadelphia office, and he denies the charge ACORN threw the two of them out of the office and called the cops. We'll see."

Wallace didn't note that ACORN released a police report naming O'Keefe. In relaying O'Keefe's denial that the Philadelphia ACORN office "called the cops," Wallace didn't mention that ACORN has publicly released a July 24, 2009, Philadelphia police report stating that an ACORN employee complained to police that O'Keefe had created a "verbal disturbance" at ACORN's office.

Other news outlets have reported on police report. On September 11, CNN's Abbie Boudreau reported that an ACORN spokesperson "told us today that the filmmakers made similar efforts in Philadelphia, and in that case, ACORN workers actually reported the filmmakers to the police. ACORN provided a copy of that police report to us." The Washington Post reported on September 17 that "[a]n ACORN spokesman said they [the videographers] were turned away in Miami, Los Angeles and Philadelphia, where workers called police and filed a report." The Post further reported on September 18 that "ACORN emailed a copy of a Philadelphia police report dated July 24 to The Post to verify its account that police were called and the couple was shown the door. O'Keefe is named on the report." The Philadelphia Daily News reported on September 16 that Philadelphia ACORN president Carol Hemingway "e-mailed copies of the incident report to the news media."