Why can’t Neronha and the local media give us insurance information straight?
Whether Rhode Island’s health insurers are overreaching in their requested premium increases for the upcoming year is a question I lack the time and expertise to answer, but I can say that a recent news splash from Rhode Island Attorney General Peter Neronha has enough markers of political propaganda to justify suspicion about his findings. Worse, the local news media do nothing but amplify his spin, leaving Rhode Islanders severely underinformed and therefore unable to make reasoned decisions.
Let’s trace the inquiry backwards from a key section of Alexa Gagosz’s Boston Globe article:
Many of these companies have posted enormous profits in recent years, Neronha said. Cigna, for example, requested an increase of 5.9 percent in the large group market, after it reported a total adjusted revenue of more than $180 billion in 2022 and its profit topped $1.2 billion. The company also projected adjusted revenue of $187 billion this year.
Aetna, which is owned by Woonsocket-based CVS Health, requested a 6.6 percent rate increase in the large group market after posting a $91.4 billion revenue in 2022. Aetna ultimately contributed to CVS’s $4.1 billion profit in 2022. On Tuesday, Neronha stressed in a statement that the insurers’ increased financial resources should be “passed on to benefit consumers” by making their coverage more affordable.
The first thing to note is that Gagosz simply repackaged key parts of Neronha’s press release. “Enormous profits,” for instance, is his language, not hers, and she presented his talking points without doing any work to provide context. Although she has updated her article since I brought this problem up on Tuesday on Twitter, she originally didn’t address the fact that revenue is not profits, the latter of which must take into account the level of expenditures. A business can have massive revenue and still experience a loss, which the attorney general — the attorney general! — glossed over in his press release.
That’s only the start of the obvious spin. Following the links in Neronha’s press release to his actual reports brings up more questions. Notably, most of his contentious claims about revenue don’t come from analysis, but from casual online research, which is sometimes analysis of analysis of actual data. By the time we get to the press release and the news articles about it, important context is completely lost.
For the lead example of “enormous profits,” Neronha cites Cigna, but according to his own report, that company covers a single group of 325 people in Rhode Island. The company’s profits — which, according to Gagosz, amount to less than 1% of its revenue — have hardly anything at all to do with the Ocean State.
The other examples have similar problems. Note the carefully crafted language in Gagosz’s article: “Aetna ultimately contributed to CVS’s $4.1 billion profit in 2022.” She cites the profit of the entire retail, pharmacy, clinic, and insurance conglomerate that is CVS as if that is a reflection of its insurance arm! She also skips the information in the first paragraph of her source, which acknowledges that CVS’s profits were down nearly by half from the prior year.
In that context, it’s significant to note that Rhode Island’s insurance commissioner limited insurers to a 1% profit last year. In other words, Neronha’s implicit case is that these companies should redistribute their profits from other states and entirely separate types of business activity to Rhode Islanders in the form of artificially low rates. That’s all well and good as long as the state can force it, but businesses don’t have to offer insurance in our state at all, and the less competition we have, the more political influence the remainders will have.
The most important bit of information we lose in these propagandistic headlines, however, is that Rhode Island’s high insurance rates are more a function of bad policy from the State House, not corporate greed. Mandates limit choice, which drives up price. Squeeze the insurers, and they’ll squeeze the providers, and we’ll get fewer providers… which will drive up the price of those who remain until the market finds an equilibrium. We can be sure, in all this, that Rhode Islanders will lose out on the deal, because as the willingness to spin us shows, nobody’s really trying to keep us well informed or supported.
Featured image from Shutterstock.