Aetna CEO defends insurance industry profits

The CEO of Aetna testified to Congress last week that the escalating cost of insurance is the result of increased cost for health services and are not creating extra profits for the insurance industry. (Source: “Aetna, lawmakers debate health costs, uninsured,” Reuters, June 10, 2008)

CEO Ron Williams, speaking before the Senate Finance Committee, defended the insurance industry’s practice of medical underwriting, or charging different rates based on a person’s risk factors or medical history. He said requiring the same premiums for all regardless of medical history would drive up the cost for everyone even more. He also said that mandating insurance and creating a mechanism for enforcing it would be one way to do away with the need for underwriting.

Aetna earned $1.8 billion in net income in 2007, or a 6.6 percent profit margin, according to Reuters Estimates. Williams touted investments in information technology and giving patients more information about the prices of different procedures and doctors as potential ways to drive down health care costs.