Insurers' stock price performance

Insurer stock prices continue to rise, with stock performance by the major U.S. insurers outstripping the stock market by large margins, according to research by Brian Klepper of Worksite Health Advisors.

In the period Klepper has been tracking the stocks of Humana, UnitedHealthCare, Cigna and Anthem, Humana’s stock price has risen from $31.58 to $497.24, a 1575 percent price growth, Klepper’s figures show. United’s price rose from $27.51 to $522.91, a whopping 1901 percent growth.

In the same period, the Dow Jones industrial average rose by 374 percent, and the S&P  500 by 516 percent, according to Klepper.

The growth in revenues is fueled by a lot of federal spending, Klepper notes, citing research by Wendell Potter, a former insurance company exec turned activist. Potter writes on his blog about how much of current revenues for major insurers come from tax dollars — in the form of Medicare Advantage income, primarily, he says.

federal revenue as part of insurers' income

Potter writes: “Over the past 10 years, UnitedHealth’s Medicare Advantage enrollment increased by about 4.4 million, from 2.6 million to almost 7 million. During that same time frame, its commercial (private paying) enrollment increased by just 70,000. One reason is that employers increasingly have found that offering coverage to their workers is prohibitively expensive. Fewer than half of the nation’s employers now offer subsidized coverage to their employees and dependents….

“Medicare Advantage is hands down the industry’s biggest cash cow these days. Wall Street is thrilled that so much of our taxes is going to a handful of big New York Stock Exchange companies,… (Insurers are paid 4 percent more than it would cost to cover similar people in traditional Medicare, according to MedPAC).”

Potter also notes that his figures do not include subsidies from the federal government for Affordable Care Act insurance policies taken by people who qualify for subsidies because of their income. These subsidies, of course, would also be federal money added to the bottom line.

Jeanne Pinder

Jeanne Pinder  is the founder and CEO of ClearHealthCosts. She worked at The New York Times for almost 25 years as a reporter, editor and human resources executive, then volunteered for a buyout and founded...