Health insurers made billions from the GOP tax cut. They're keeping almost all their windfall.
In your periodic reminder that the U.S. has a for-profit health-care system, health insurers and other health-care companies will save tens of billions from the Republican tax overhaul but "patients should not expect the health industry's windfall to lead to lower premiums, reduced prices, or major industry changes," Bob Herman and Caitlin Owens report at Axios. They discovered this by listening to the health-care companies, perusing their fourth-quarter financial reports and conference calls with investors.
The 21 publicly traded companies Axios looked at "collectively expect to gain $10 billion in tax savings in 2018 alone," Herman and Owens write. "Most of the money is going toward share buybacks, dividends, acquisitions, and paying down debt — with just a sliver for one-time employee bonuses, research, and internal investments." Few pharmaceutical companies were included in the Axios data, but drugmakers are already spending at least $50 billion on new stock buybacks, and they and medical device companies are also repatriating tens of billions from offshore accounts, bolstering their bottom lines.
It isn't just health care — U.S. companies have announced more than $218 billion in share buybacks since the GOP passed the law in December, investment research firm TrimTabs said last week. The $153.7 billion in buybacks in February alone broke the previous record of $133 billion in April 2015, and "if the pace keeps up, this year's volume will smash totals from all other previous years going back more than a decade," TrimTabs analyst Winston Chua said in the report.
Subscribe to The Week
Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.
Sign up for The Week's Free Newsletters
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
"Those so-called buybacks are good for shareholders, including the senior executives who tend to be big owners of their companies' stock," Matt Phillips explains at The New York Times. "A company purchasing its own shares is a time-tested way to bolster its stock price. But the purchases can come at the expense of investments in things like hiring, research and development, and building new plants — the sort of investments that directly help the overall economy."
Create an account with the same email registered to your subscription to unlock access.
Sign up for Today's Best Articles in your inbox
A free daily email with the biggest news stories of the day – and the best features from TheWeek.com
Peter has worked as a news and culture writer and editor at The Week since the site's launch in 2008. He covers politics, world affairs, religion and cultural currents. His journalism career began as a copy editor at a financial newswire and has included editorial positions at The New York Times Magazine, Facts on File, and Oregon State University.
-
Unpasteurised milk and the American right
Under the radar Former darling of health-conscious liberal foodies is now a 'conservative culture war signal': a sign of mistrust in experts
By Harriet Marsden, The Week UK Published
-
Government shutdown looming? Blame the border
Talking Points Democrats and Republicans say funding for immigration enforcement is the budget battle's latest sticking point. That's about all they agree on.
By Rafi Schwartz, The Week US Published
-
'Conservatives have not limited their attack on reproductive rights to the US'
Instant Opinion Opinion, comment and editorials of the day
By Harold Maass, The Week US Published
-
Housing costs: the root of US economic malaise?
speed read Many voters are troubled by the housing affordability crisis
By Peter Weber, The Week US Published
-
Feds cap credit card late fees at $8
speed read The Consumer Financial Protection Bureau finalized a rule to save households an estimated $10 billion a year
By Peter Weber, The Week US Published
-
Immigration helped the US economy outpace peers
speed read The U.S. economy grew at an annualized rate of 3.2% last quarter
By Peter Weber, The Week US Published
-
4-day workweek gets boost from UK study
Speed Read Following a six-month trial, the majority of participating British companies are still using the truncated schedule
By Peter Weber, The Week US Published
-
US sues to block Kroger-Albertsons merger
Speed Read The Federal Trade Commission sued to block the $24.6 billion merger between the grocery giants
By Peter Weber, The Week US Published
-
Nvidia sees historic stock rise on AI chips success
Speed Read U.S. chipmaker Nvidia achieved the biggest one-day increase in value of any company in history
By Peter Weber, The Week US Published
-
New York may seize Trump's assets for $450M penalty
Speed Read The former president likely owes $600 million from two civil judgments in New York
By Peter Weber, The Week US Published
-
Capital One to buy Discover for $35B
Speed Read The deal, if cleared by regulators, would create the biggest credit card lender in the country
By Peter Weber, The Week US Published