Aetna, lawmakers debate health costs, uninsured

WASHINGTON, June 10 (Reuters) - The chief executive of Aetna Inc


, one of the biggest U.S. health insurers, on Tuesday told lawmakers the escalating cost of insurance is driven by factors other than excess profits at insurers.

CEO Ron Williams spoke as the Senate Finance Committee considers fixes to the market for health insurance. There are about 47 million uninsured Americans, or approximately 15 percent of the population.

Steep costs and access to health care are cited among the top domestic policy issues in voter polls leading up to the presidential and congressional elections this November.

Williams argued that there are "misperceptions" about health insurance profits, and said "merely 6 cents (of every premium dollar) goes to after-tax profit" at Aetna.

"The point I want to drive home is that health insurance premiums are primarily a reflection of overall cost of health-care services," Williams said.

Aetna earned $1.8 billion in net income in 2007, or a 6.6 percent profit margin, according to Reuters Estimates.

"The health insurance market is failing to keep premiums in check," said finance panel member Max Baucus, a Democrat from Montana. But he and others did not grill Williams on insurers' profits, a frequent target of Democrats.

The panel heard from 53-year-old Lisa Kelly, a woman with leukemia who has racked up more than $200,000 in medical bills and now must tap into retirement savings to help fund her care.

Medical underwriting -- adjusting premiums on the risk posed by a patient based on medical history -- will be necessary until all individuals are mandated to buy insurance and there is a mechanism to enforce it, Williams said.

Requiring the same premiums for all regardless of medical history will drive up the cost for everyone, he said.

To drive down costs, Williams cited investments in information technology and giving patients more information about the prices of different procedures and doctors.

But savings from widely hyped information technology are far from certain.

The Congressional Budget Office last month released a report casting doubt on the billions in savings cited by some that could come from improved medical IT.

Small business owner Raymond Arth, president of Phoenix Faucets of Avon, Ohio, urged lawmakers to remember small business owners when considering health-care reforms.

Arth, a former National Small Business Association chairman, echoed Williams' call for information technology in hopes of reducing costs and improving services for patients.

"I can get more information if I want to buy a TV than if I want to have my knee repaired," Arth said. (Editing by Mark Porter)