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NEWS FROM CAMBRIDGE HEALTH ALLIANCE
June 4, 2009
Health, Life Insurers Hold Billions in Tobacco Stocks
Harvard researchers at Cambridge Health Alliance say insurers put profits over health
Cambridge, MA…More than a decade after Harvard Medical School
researchers first revealed that life and health insurance companies
were major investors in tobacco stocks - prompting calls upon them
to divest - the insurance industry has yet to kick the habit, they
say.
A new article on insurance company holdings, published in the June
4th edition of the New England Journal of Medicine, shows
that U.S., Canadian, and U.K.-based insurance firms hold at least
$4.4 billion of investments in companies whose subsidiaries manufacture
cigarettes, cigars, chewing tobacco, and related products.
Tobacco products currently contribute to the deaths of 5.4 million
people worldwide annually, according to the World Health Organization.
Tobacco use is a major risk factor for stroke, heart attack, lung
disease, and cancer.
"Despite calls upon the insurance industry to get out of the
tobacco business by physicians and others, insurers continue to
put their profits above people's health," said J. Wesley Boyd,
MD, PhD, lead author of the article, an attending psychiatrist at
Cambridge Health Alliance, and an assistant clinical professor of
psychiatry at Harvard Medical School. "It's clear their top
priority is making money, not safeguarding people's well-being."
For example, Boyd and his colleagues point to Newark, N.J.-based
Prudential Financial Inc., which sells life insurance and long-term
disability coverage. With total tobacco holdings of $264.3 million,
Prudential Financial is a major investor in three tobacco firms,
including Reynolds American, whose subsidiary R.J. Reynolds manufactures
Camel and Pall Mall cigarettes, and Philip Morris, maker of the
popular Marlboro brand.
Sun Life Financial Inc., based in Toronto, sells life, health,
disability, and long-term care insurance. It also owns slightly
over $1 billion in stock in two tobacco companies, including $890
million in Philip Morris.
London-based Prudential Plc, which offers health, disability, and
long-term care insurance, has holdings of $1.38 billion in two tobacco
companies, including British American Tobacco, which markets Kent
and Lucky Strike cigarettes.
The researchers also itemized the substantial tobacco holdings
of Northwestern Mutual of Milwaukee and Massachusetts Mutual Life
of Springfield, Mass., along with those of Standard Life Plc, a
health and life insurer based in Edinburgh, Scotland. (See table:
http://pnhp.org/tobacco/Insurance-Company-Tobacco-Investments.doc;
all data current as of March 26, 2009.)
Boyd and co-authors Drs. David Himmelstein and Steffie Woolhandler,
who are also clinicians at Cambridge Health Alliance and faculty
members at Harvard Medical School, culled their data from Osiris,
a proprietary database of industrial, banking and insurance companies.
Osiris draws upon Securities and Exchange Commission filings and
news reports from providers like Dow Jones and Reuters.
"Although investing in tobacco while selling life or health
insurance may seem self-defeating," wrote the authors, "insurance
firms have figured out ways to profit from both. Insurers exclude
smokers from coverage or, more commonly, charge them higher premiums.
Insurers profit - and smokers lose - twice over."
The same researchers first published data about the "tobacco-insurance
company connection" in 1995 in the medical journal Lancet.
They argue that because private, for-profit insurers have repeatedly
put their own financial gain over the public's health, people in
the United States, Canada, and the United Kingdom should be wary
about insurance firms' participation in care.
They added, "These data raise a red flag about the prospects
of opening up vast new markets for private insurers at public expense,
as has happened in our state of Massachusetts, whose recent health
care reform is often cited as a model for national reform."
"Insurance Industry Investments in Tobacco" published
by the New England Journal of Medicine. June 4, 2009. Authors:
J. Wesley Boyd, MD, PhD, David U. Himmelstein, MD, and Steffie Woolhandler,
MD, MPH.
Cambridge Health Alliance is an innovative, award-winning
health system that provides high quality care in Cambridge, Somerville,
and Boston's metro-north communities. It includes three hospital
campuses, a network of primary care and specialty practices, the
Cambridge Public Health Dept., and the Network Health plan. CHA
is a Harvard Medical School teaching affiliate and is also affiliated
with Harvard School of Public Health, Harvard School of Dental Medicine,
and Tufts University School of Medicine. Visit us online at www.challiance.org.
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Media Contact
David Cecere
Media Relations Manager
Phone: 617-503-8428
Cell: 617-921-9613
Pager: 617-546-1879
dcecere@challiance.org
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