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A Project of The Annenberg Public Policy Center

Insurance Co. Profits: Good, But Not Breaking Records

When President Obama said at his July 22 news conference that health insurance companies were making record profits "right now," we thought he might have insider access to corporate earnings data. After all, most of the top publicly traded companies were on the verge of filing their reports, but only one had done so at the time Obama spoke.

Obama, July 22: Now, you know, there had been reports just over the last couple of days of insurance companies making record profits. Right now, at the time when everybody’s getting hammered, they’re making record profits and premiums are going up.

A day earlier, UnitedHealth Group had reported its earnings for the second quarter of 2009, which beat analysts’ expectations with profit of $859 million. Still, other quarters have been more profitable for the insurer, such as the first quarter of 2008, when profit rang in at $994 million.

We wondered if there was any other evidence to support Obama’s statement now that other earnings reports are in. The answer is: not much. Humana Inc. logged a quarterly profit of almost $282 million. But in the third quarter of 2007, it rang up $302 million in profits. Aetna came in at $347 million in profit for the quarter, which lagged behind its $480 million of a year earlier.

Health Net logged a $40 million profit in the spring quarter, compared with $77 million a year earlier. Wellpoint’s $693 million for the quarter paled next to its third quarter 2008 profit of nearly $821 million. And Coventry Health Care Inc. wasn’t breaking any records, with second quarter profit of about $18 million compared with $83 million a year earlier.

CIGNA’s balance sheet showed second quarter profit of $435 million, which was better than anytime in the last couple of years, but the company saw higher numbers in, say, 2004 and 2005. In the quarter ending June 30, 2005, for instance, the company’s net income, or profit, came in at a sizable $720 million.

In general, the health insurance industry did poorly toward the end of 2008 and in the first quarter of 2009, so record profits weren’t likely in the second quarter.

Obama was right about one thing: Health insurance premiums have gone up. The average premium for a family with employer-sponsored insurance rose 5 percent from 2007 to 2008, according to the Kaiser Family Foundation, and has more than doubled since 1999. Figures for 2009 haven’t been calculated yet.