What’s Wrong With This Picture?

June 17, 2009 at 7:55 pm Leave a comment

Congress Finds Tobacco Causes Serious Illness And Death. New England Journal Of Medicine Finds Health Insurance Industry Has Large Tobacco Stock Holdings.

The Family Smoking Prevention and Tobacco Act (H.R. 1256ENR) passed both houses of Congress and is awaiting the President’s signature. In that bill, Congress made the following findings:

  •  “Tobacco use is the foremost cause of premature death in America. It causes over 400,000 deaths in the United States each year, and approximately 8,600,000 Americans have chronic illnesses related to smoking.” H.R.1256 ENR §2(13)
  • “The use of tobacco products by the Nation’s children is a pediatric disease of considerable proportions that results in new generations of tobacco-dependent children and adults.” H.R.1256 ENR §2(1)
  • “A consensus exists that tobacco products are inherently dangerous and cause cancer, heart disease and other serious adverse health effects.” H.R.1256 ENR §2(2)
  • “Nicotine is an addictive drug.” H.R.1256ENR §2(3)
  • “Tobacco dependence is a chronic disease, one that typically requires repeated interventions to achieve long-term or permanent abstinence.” H.R. 1256 ENR §2(33)

So, why do health insurance companies, the very companies that Congress wants to run health care reform, have major holdings in tobacco companies?

A recent report in a letter to the New England Journal of Medicine (“Insurance-Industry Investments in Tobacco,” N Engl J Med 360:23, June 4, 2009, at 2483-2484) perhaps provides the answer:

“Insurance firms, like any business, are driven by profit and this fact compromises any health care plan that includes them…..Although investing in tobacco while selling life or health insurance may seem self-defeating, insurance firms have figured out ways to profit from both. Insurers exclude smokers from coverage, or more commonly, charge them higher premiums. Insurers profit … twice over.” (Id.)

According to this recent report, U.S. based Prudential Financial (which provides life and long-term disability insurance) owns tobacco holdings of $264.3 million; U.K. based Prudential (which provides health, life and long-term disability insurance) has a stake in tobacco totaling $1.38 billion; Standard Life (which offers health and life insurance) owns nearly $950 million of tobacco stock; Canada based Sun Life, which offers health, life, disability and long term care insurance owns just over $1 billion of tobacco stock. Northwest Mutual and MassMutual (both of which offer life, disability and long-term care insurance) respectively own more than $235 million and $585 million of tobacco stock. (Id.).

As the writers to the New England Journal of Medicine remarked, “[T]hese data are a reminder of the true priority of the insurance industry, which is making money, not ensuring health and well-being.” (Id.)

Are these really the companies we want running our new health care reform program?

Entry filed under: Health Care Reform, Public vs. Private Health Coverage. Tags: , .

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Health Policy Expertise

We provide effective, innovative opportunities to impact federal Medicare and health care policies and legislation in order to advance fair access to Medicare and quality health care.

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June 2009


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