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The stronger financial performances have given insurers a growing supply of cash to spend, and dividends are an option for that money, especially when there are few prospective acquisitions out there for big companies to make, Laszewski said. One option they won't take is using that excess cash to reduce premiums, the consultant said. Some insurers, including WellPoint, took heavy criticism for jacking premiums in individual insurance markets last year while reporting rich profits. Using cash to lower premiums would be a temporary solution that does nothing to solve the underlying problem of spiraling care costs, Laszewski said. It also would put off rate increases for a year, when they would compound and create an even bigger headache. "Subsidizing these rates for one year would really be a stupid thing to do because you only create a much bigger problem for consumers and regulators in two years and therefore (insurers)," he said. Of the five largest health insurers, only Cigna Corp. and Humana Inc. do not offer dividends.
[Associated
Press]
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