The Big Seven health insurers spent $26.2 billion buying back their own stocks in 2022 to enrich CEOs, shareholders
REMINDER: That $26 billion health insurers used to buy back their shares was for just one year.
Last week we reported that the Big Seven for-profit health insurers made more than $69 billion in profits in 2022 – a record haul – on combined revenues of $1.25 trillion.
With all of that money, the companies clearly could give their customers a break on their out-of-pocket obligations, which could make a significant dent in the growing mountain of medical debt more and more Americans are finding themselves buried under. Last year, Kaiser Health News reported that 100 million of us – the vast majority of whom have health insurance – now have medical debt, primarily because insurers require us to pay thousands of dollars in many cases before they will begin paying claims.
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But instead of doing that, the Big Seven spent $26.2 billion last year buying back their own stock to boost the value of shares, a once-illegal practice that benefits no one other than already-rich shareholders.
Increasingly, as insurers and employers continue moving as many of us as possible into high-deductible health plans, we are becoming a nation of the functionally uninsured. Most of us have health insurance, but millions of American families are now forgoing the medical care they need because they simply don’t have the cash to meet their deductibles and other out-of-pocket requirements, which include coinsurance and copayments. Many people with diabetes, for example, are skipping doses of insulin and other medications they need.
Middle-class families are being hit the hardest, and middle-class people of color who have high-deductible health insurance are arguably the most frequent victims. Researchers at Boston University have found that high-deductible health plans are exacerbating racial health disparities. In a 2020 study, they discovered that Black breast cancer patients who are enrolled in high-deductible plans are less likely to be diagnosed and treated in a timely manner than women who have little or no deductibles.
High-deductible plans are inordinately punitive to middle-class families. That’s because low-income Americans enrolled in Medicaid are spared from unaffordable out-of-pocket expenses, and the wealthy among us have the financial resources to easily cover those expenses.
The Big Seven health insurers – UnitedHealth, CVS/Aetna, Cigna, Elevance, Humana, Centene, and Molina – could use the $26 billion they spent buying back their own shares to alleviate the burden of out-of-pocket requirements and still have plenty left over for their top executives and other shareholders. Unfortunately, investors have come to expect big share buybacks, which were unlawful until a little over 40 years ago.
As former Labor Secretary Robert Reich wrote this morning:
Before 1982, it was illegal for corporations to purchase their own stock to artificially prop up share prices. Then Ronald Reagan’s SEC adopted a rule protecting corporations from being charged for this kind of stock manipulation.
Jump ahead to 2017 and the Trump-GOP tax cuts added fuel to the fire. Since then, stock buybacks have more than doubled, reaching a record high $1.2 trillion in 2022 alone.
That’s $1.2 trillion that did not go into improving quality of life for American workers or building the American economy. It just went straight into the pockets of already-wealthy shareholders and CEOs.
Once again, Wall Street gains at the expense of working families.
Reich notes that the Biden administration supports a bill – the Stock Buyback Accountability Act of 2023, introduced by U.S. Sens. Sherrod Brown (D-Ohio) and Ron Wyden (D-Oregon) – that would impose a 4% tax on buybacks. That would be an increase from the 1% tax imposed by the Inflation Reduction Act last year.
A 4% tax on buybacks would generate $48 billion, which could be used to help alleviate the burden of medical debt for millions of Americans and reduce cost-sharing requirements for many other patients.
By the way, that $26 billion health insurers used to buy back their shares was, as I noted, for just one year. In a future post, I’ll tally up the totals over the past several years. Spoiler alert: the numbers are mind-blowing.
I think most of us know about the evils of Big Pharma. What we need now is action to enjoin New York City from throwing retirees under the bus with a cheap Medicare Advantage plan.
The proposed 4% tax on stock buybacks is well intentioned but misguided. Instead, progressives must unite around a multi-pronged public information campaign. Its aim: to pressure the five members of the Securities and Exchange Commission to rescind Rule 10b-18, the so-called "safe harbor" rule that gives corporate criminals a get-out-of-jail-free card for perpetrating the blatant fraud of buying back their own shares — a sham transaction that (by definition) has no legitimate business purpose. Wendell Potter is right: this money should go back to you and me.