Weekly Standard Online

Insurers' Profits Have Nearly Doubled Since Obama Was Elected

(Aslan Alphan/Getty Images)
(Aslan Alphan/Getty Images)

In 2008, the year that Barack Obama was elected as president, the combined annual profits of America's ten largest health insurance companies were $8 billion. Under Obamacare, the ten largest health insurers' annual profits have risen to $15 billion. This is another fine example of the natural alliance between Big Government and Big Business, which flourishes at the expense of Main Street Americans.

Meanwhile, the real median American household income in November of 2008, when Election Day hit in the middle of the recession, was $57,899. By December of 2015—six and a half years after the recession ended—it had actually dropped, to $57,701. So far this year (as of August), it has dropped another $321, to $57,380.

So while health insurers' profits have risen more than 80 percent, Americans' incomes haven't even flatlined.

That's according to the Fortune 500, which shows the ten largest health insurers' profits as $8.3 billion in 2008 and $15.0 billion in 2015, and income figures from the U.S. Census Bureau, compiled by Sentier Research. These are interesting stats to reflect upon as Obamacare's open-enrollment period for 2017 begins in less than a week.

Obama talks a good game about how health insurers have been brought to heel under Obamacare. But the reality is quite different from the rhetoric. Maybe that's why insurance companies supported Obamacare in the first place.

In truth, it is the American people who have been brought to heel under Obamacare. They must now buy a product or service of the federal government's choosing—the health insurers' product—for the first time in all of American history, merely as a condition of living in the United States.

They can no longer buy whatever insurance they want to buy—such as genuine, affordable insurance that they purchase before they get sick or injured—but are limited to buying the type of insurance Obama thinks they should buy, covering the types of things Obama thinks it should cover. With people able to buy "insurance" at essentially any time, at no additional cost for being sick or injured—which is like being able to buy homeowners insurance after their house is already on fire—prices are going through the roof.

Indeed, Americans must now pay a whopping 40 percent more for their Obamacare insurance—on average--than they had to pay just two years ago. For every $100 that someone spent on Obamacare insurance in 2015 (at which point the plans were already quite pricey), they had to pay, on average, $112 in 2016 (a 12 percent increase) and will have to pay $140 in 2017 (a further 25 percent increase).

Despite these skyrocketing prices, most insurers aren't making money selling Obamacare exchange plans. Rather, they are exiting the exchanges like fans heading for the stadium tunnels in the fourth quarter of a blowout. So where are they making their money under Obamacare? It's hard to say with certainty, but it seems that two areas have been very lucrative for insurers: contracting with states to provide Medicaid managed care, which is a way for insurers to capitalize on Obamacare's massive Medicaid expansion (the main source of new coverage under Obamacare); and providing administrative and consulting services to employers who—partly to escape some of Obamacare's mandates—self-insure their employees but need help setting up doctor networks and navigating Obamacare's byzantine rules. Insurers who specialize in either of these two areas seem to have done much better under Obamacare than they did in the pre-Obamacare era.

So Obama got what he wanted (Obamacare), insurers got what they wanted (money), and Americans who liked their plans got to lose their plans. Now those same Americans, and millions of their fellow citizens, either get to pay sky-high premiums or pay a fine for noncompliance.

It's well past time to repeal Obamacare and replace it with a conservative alternative that will lower costs, increase choices, and let insurers compete for business without mandating that Americans buy their product.