Health Insurers Cut 3Q Lobby Cost - Analyst Blog

Most of the leading health insurance companies reduced their lobbying costs in the third quarter of 2011, compared with the second quarter, although many recorded a year-over-year increase.

WellPoint Inc. ( WLP ), the largest health insurer based on membership, spent $870,000 on lobbying in the third quarter, up 9% from the prior-year quarter. However, the cost was down by a substantial 34% from the second quarter of 2011.

The second-largest health insurer based on membership and largest in terms of total revenue, UnitedHealth Group Inc. ( UNH ), also recorded a significant 18% year-over-year hike to $650,000, while it witnessed a sizeable 24% decline from the prior quarter.

Meanwhile, CIGNA Corporation ( CI ), the fourth largest health insurer on the basis of membership, bucked the trend by red ucing its lobbying cost by a considerable 34% from the year-ago quarter to $470,000, while the amount was 24% higher than $380,000 spent in the second quarter of 2011.

Humana Inc. ( HUM ), which is the fifth-largest on enrollment basis, recorded a 43% year-over-year and 11% sequential decline in lobbying expenses to $160,000.

The insurers are worried about the annual charges and restrictions imposed on them by the health care reform bill, which is the main reason for the high spends on lobbying i n both the second and third quarters of 2011.

The bill imposes fines on uninsured individuals from 2014 onwards, which will increase the insured population, and thereby, the revenue of health insurers. However, the restrictive conditions such as the minimum medical loss ratio ( MLR ) have made the insurance companies apprehensive about it.

Thus, all health insurers focused their lobbying on the health care overhaul, while simultaneously lobbying on a variety of other issues as well. However, WellPoint lobbied solely on the various provisions of the reform bill, such as insurance exchanges, rate regulations, essential health benefits and minimum MLR.

Meanwhile, UnitedHealth lobbied on the Dodd-Frank Wall Street Reform & Consumer Protection Act, the defense health system and the Budget Control Act of 2011, apart from the health care reform bill.

Further, CIGNA lobbied on the health care overhaul, taxation of employer-provided health coverage and some Medicare Advantage and Part D prescription drug programs' implementation issues.

Humana lobbied on the annual charges implemented by the health care overhaul, the Small Business Health Relief Act of 2011, the Medicare Data Access for Transparency and Accountability Act, and the Medicare Beneficiary Preservation of Choice Act of 2011.

All of them lobbied the Congress and the White House, while all except UnitedHealth lobbied the Centers for Medicare and Medicaid Services. WellPoint also lobbied the departments of Health and Human Services, Treasury and Labor and CIGNA lobbied the Congressional Budget Office and the Departments of Health and Human Services and Treasury.

Currently, both WellPoint and Humana carry a Zacks #2 Rank (short-term Buy rating), while UnitedHealth and CIGNA carry a Zacks #3 Rank (short-term Hold rating).

CIGNA CORP ( CI ): Free Stock Analysis Report

HUMANA INC NEW ( HUM ): Free Stock Analysis Report

UNITEDHEALTH GP ( UNH ): Free Stock Analysis Report

WELLPOINT INC ( WLP ): Free Stock Analysis Report

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story


Other Topics


Latest Markets Videos


Zacks is the leading investment research firm focusing on stock research, analysis and recommendations. In 1978, our founder discovered the power of earnings estimate revisions to enable profitable investment decisions. Today, that discovery is still the heart of the Zacks Rank. A wealth of resources for individual investors is available at

Learn More