Insurance Cos Cut Lobbying Costs - Analyst Blog
August 18 2011 - 12:00PM
Zacks
Lobbying expenses
declined for most health insurance companies, such as Humana Inc. (HUM) and Aetna Inc. (AET), in
the second quarter of 2011.
Particularly, Humana
spent only $180,000 on lobbying, which was only two-thirds of the
amount spent on lobbying in the year-ago quarter and 65% of the
amount spent in the first quarter of 2011, in the second quarter of
the year.
Most of the costs were
focused on the health-care reform bill passed last year, the FIT
Kids Act, the Small Business Health Relief Act of 2011 and the
Medicare Data Access for Transparency and Accountability
Act.
Humana also lobbied
against the annual fees imposed by the health-care reform bill on
health insurance companies along with various other charges and
restrictions.
The health-care
overhaul-related bill was passed last year to protect the Americans
who do not have health insurance. It aims to cover over a million
uninsured people. While the bill is expected to bring in new
business for health insurance companies, it imposes a lot of
restrictions and fees on them, thereby inviting disapproval from
such companies.
Meanwhile, rival health
insurance company Aetna spent $902,453 on lobbying in the second
quarter of 2011, showing a 42% decline from the amount spent in the
prior-year quarter and a 17% decline from the first quarter of the
year.
Aetna lobbied against
the health-care reform bill, which seems to have become a cause of
concern for all health insurance companies. The company lobbied for
a legislation to withdraw the bill’s directive requiring the
insurance of all Americans. Aetna also lobbied against the minimum
medical-loss ratio imposed by the bill as well as the mandate to
spend a fixed portion of the premiums collected either on patient
care or as refunds to the insured person.
Additionally, the
company lobbied for bills to exclude brokers’ compensation from the
calculation of the above mentioned premiums, allow the Department
of Health and Human Services to directly negotiate drug prices and
allow the establishment of a Medicare Part D prescription drug
program and an insurance marketplace on a national
scale.
Both Aetna and Humana
lobbied the Congress, the White House and the Centers for Medicare
and Medicaid Services. In addition, Aetna lobbied the Department of
Health and Human Services.
CIGNA
Corporation (CI), another health insurance rival of both Humana
and Aetna, spent $380,000 on lobbying in the second quarter of the
year, showing a 32% decline from the year-ago quarter but a 36%
increase from lobbing expenses in the first quarter of
2011.
While the reduced
expenses helped in improving the bottom-line of the companies,
successful lobbying can have a more long-lasting effect on income.
Lawmakers receive huge contributions from health insurance
companies and effective lobbying can lead to favorable changes in
the law, leading to long-term benefits for the
companies.
Both Aetna and CIGNA
currently carry a Zacks #2 Rank, implying a short-term Buy rating,
while Humana carries a Zacks #1 Rank, which translates into a
Strong Buy rating for the short-term.
AETNA INC-NEW (AET): Free Stock Analysis Report
CIGNA CORP (CI): Free Stock Analysis Report
HUMANA INC NEW (HUM): Free Stock Analysis Report
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