On Monday, I wrote about the good fortune of UnitedHealth Group, one of the big seven for-profit health insurance companies, and its CEO, Stephen J. Hemsley. Last week, UnitedHealth pleased Wall Street so much with its report of earnings during the first three months of this year that investors clamored to buy the company's stock.
By the time the New York Stock Exchange closed last Thursday, shares of UnitedHealth's stock had shot up more than 8 percent and reached their highest value in more than three years. The company's shareholders, including Hemsley, now the highest paid CEO in America, were suddenly much wealthier.
Owners of health insurance company stock have continued to get richer this week. On Tuesday, Humana Inc. announced that its first quarter earnings would be so much better than Wall Street expected that it was raising its full-year profit outlook and instituting a dividend. The company's stock price jumped 5.5 percent after disclosing that fabulous news.
The good news, at least for shareholders, just keeps on coming. Yesterday, WellPoint Inc., which operates more than a dozen Blue Cross plans across the country, announced that it, too, had exceeded Wall Street's expectations during the first quarter--by an astonishing 48 cents per share.
When I was handling financial communications at CIGNA, I knew investors would be pleased if the company exceeded their expectations by even a penny a share. During my nearly two decades in the industry, I never saw insurers blow past what they had been expected to earn by such wide margins. WellPoint's shareholders must be pinching themselves today to make sure they're not dreaming.
To make this kind of money, insurance companies have to spend far less paying their policyholders' medical claims than anyone thought possible.
They've been able to do that so far this year, despite the new health care reform law, by shifting many policyholders into plans that force them to spend more from their own pockets before coverage kicks in. Insurance firms also fatten their bottom lines by denying more claims.
What are the real-world consequences?
Let me share portions of just three e-mails I received this week to give you a hint. I wish I could say that such e-mails are rare.
The first came from a man who actually sells policies for one of the above-mentioned firms on a part-time basis. He decided to write me after visiting a family that was on the verge of bankruptcy because of what they have to pay for insurance coverage and out-of-pocket expenses.
He told me that the head of the family was a small business owner who was still working well into his late 60s because it was the only way he was able to provide insurance for himself, his wife and a daughter suffering from mental illness. He was paying $28,800 in annual premiums and had just been notified that he would have to pay 25 percent more when the current term of his policy expired.
Even though he was paying more than $2,000 a month for coverage, it was far from adequate. It did not cover his daughter's three-times-a-week visits to her mental health doctors, which meant that he had to pay an additional $300 per visit out of his own pocket. On top of that, he had to pay $1,000 every month for her prescriptions.
"It truly disgusted me, and I had no idea what I could do to help them," he wrote.
The irony is that the part-time insurance salesman who sent the email was uninsured. He couldn't afford coverage himself.
The second e-mail came from Molly Poole, a woman I had met in March in Lancaster, Pa. She was writing to tell about a new website -- www.LetScottLive.com -- that she created to help raise money for her husband's care. While Stephen Hemsley and a handful of other insurance company executives are becoming billionaires, Molly and Scott Poole who has Lou Gehrig's disease, are now effectively beggars. They wrote asking me to help spread the work about their plight and to assist in their efforts to raise money.