If you’re like most people, you’ve probably seen your health insurance premiums skyrocket over the past few years. On average, people who get insurance through their job saw their premiums go up 10 percent from 2006 to 2007. And that’s just the tip of the iceberg – the average employee now contributes $1,400 more to their healthcare plan than they did in 2000! All in all, the shrinking number of companies that offer health insurance pay over $12,000 on average for family health insurance coverage for their employees.

With all of this, could you believe that health insurance companies could be facing money troubles? 

A recent article in the New York Times starts with what we all already know:

“In recent years, despite soaring medical costs, insurers have made big profits by keeping premiums well ahead of health care inflation.”

But apparently, the giant health insurance company UnitedHealth has posted weaker-than-expected earnings for the first quarter of 2008. The reason? Well, according to one industry analyst:

“UnitedHealth, like many insurers, has priced its product beyond the reach of too many people[…] Insurers are finding it harder to raise prices without losing consumers.”

Normally we don’t think of Wall Street caring much about the little people and our health insurance woes. But when analysts start making the connection that the rising costs of premiums are forcing more and more people to give up health insurance altogether, you know the companies are in trouble.

So if rising premiums cause UnitedHealth to lose business, this will mean lower prices for consumers, right? Sadly, the Wall Street Journal reports that: 

“UnitedHealth […] said earlier this year that it would lose 550,000 of its 28.5 million commercial health-plan members in the first quarter. [This] signals that UnitedHealth would rather give up business than restrain premium increases too much to attract more customers.”

Sigh… great to see that insurance companies have their priorities in order!

And UnitedHealth wasn’t the only company to give its investors headaches – apparently Wellpoint’s profits took a tumble as well, falling by nearly 25% in the first quarter. But no fundamental worries here, say analysts.

WellPoint's biggest problem is that its [prescription] drug benefit is so rich that people who need lots of drugs will always buy the benefit. The easy solution: decrease the benefit so the company gets fewer of the very sick. Or increase the price to cover the cost of the benefits.

I’m sure it makes investors breathe a little easier to know that Wellpoint can just slash benefits when it’s faced with the cost of paying for prescription drugs for the “very sick.” But the real question for the rest of us remains – what will it take to get insurance companies to compete for our business by offering high quality care at low costs?