Health plans say they'll risk losing members to protect profit margins

Meanwhile, businesses and individuals are dropping coverage in the wake of higher insurance premiums.

By Emily Berry, AMNews staff. May 19, 2008.

The nation's largest publicly traded health plans say they don't plan to temper premium increases for the sake of keeping members on their rolls -- particularly not while they are under pressure from Wall Street over what it sees as their disappointing earnings.

Wall Street analysts were shaken over the long-term prospects of the health plan business after bellwethers WellPoint and UnitedHealth Group, the nation's two largest private-pay plans, reported less-than-expected profits from the first three months of this year.

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While no plan said its overall membership has gone down, most say their risk-based commercial numbers -- representing traditional employer health benefits -- are declining or are not growing as quickly as anticipated. But health insurers say cutting premiums or reducing the rate of increase to keep customers would affect their bottom lines more than losing some members over premium hikes.

"We will not sacrifice profitability for membership," WellPoint President and CEO Angela Braly told analysts during a conference call.

Coincidentally, WellPoint and other health plans reported their earnings -- and their willingness to sacrifice members to keep them up -- soon before, or during, Cover the Uninsured Week. The project, sponsored by the Robert Wood Johnson Foundation, puts a spotlight on the growing number of uninsured.

The foundation, during the April 27-May 3 event, put out a report saying that the number of private-sector establishments offering health insurance declined to 56.3% in 2005 from 58.3% in 2001 as the cost of those benefits went up nearly 29.6% in the same period. Increasing premiums have been "a big driver in the rise of the uninsured," foundation spokesman Michael Berman said. According to the U.S. Census, the number of uninsured in the U.S. rose from less than 45 million in 2005 to 47 million in 2006, the most recent estimate available.