FACT CHECK: Health Insurers Profits Not So Fat
by PubliusFrom the Associated Press:
WASHINGTON – Quick quiz: What do these enterprises have in common? Farm and construction machinery, Tupperware, the railroads, Hershey sweets, Yum food brands and Yahoo? Answer: They’re all more profitable than the health insurance industry.
In the health care debate, Democrats and their allies have gone after insurance companies as rapacious profiteers making “immoral” and “obscene” returns while “the bodies pile up.”
Ledgers tell a different reality. Health insurance profit margins typically run about 6 percent, give or take a point or two. That’s anemic compared with other forms of insurance and a broad array of industries, even some beleaguered ones.
Profits barely exceeded 2 percent of revenues in the latest annual measure. This partly explains why the credit ratings of some of the largest insurers were downgraded to negative from stable heading into this year, as investors were warned of a stagnant if not shrinking market for private plans.
Insurers are an expedient target for leaders who want a government-run plan in the marketplace. Such a public option would force private insurers to trim profits and restrain premiums to compete, the argument goes. This would “keep insurance companies honest,” says President Barack Obama.
The debate is loaded with intimations that insurers are less than straight, when they are not flatly accused of malfeasance.
They may not have helped their case by commissioning a report that looked primarily at the elements of health care legislation that might drive consumer costs up while ignoring elements aimed at bringing costs down. Few in the debate seem interested in a true balance sheet.
But in pillorying insurers over profits, the critics are on shaky ground.
Read the whole article here.
Email this to a friend | Print |
Share on Facebook
| Tweet this
| 
Follow Us on Twitter
Subscribe via RSS
Got a Tip?
73 Comments
[...] This post was mentioned on Twitter by SavageNews, John Doe. John Doe said: http://bit.ly/7GcNH not so fat profits. [...]
It is no surprise to me that politicians, especially democrats, demonize any business. They did it with US Oil companies and now they are doing it with Health Insurance Companies. These companies do not operate in a vacuum. They are heavily regulated. Coverage is state mandated. The only thing they can really control is the risk pool. The premiums are dictated by expenses. They have done a lot in recent years to streamline thier own processes to reduce thier own costs but more could and should be done. Claim processing is still a major medical expense.
It's kinda of ironic to see the Progressive demonize a business with 2% profit margins when they are advocating programs which will drive the Federal Government takings from GDP up to 25% plus, with unfunded liabilities which are orders of magnitude higher than GDP.
Dims are intellectually dishonest — always have been and probably always will be.
I despise them.
Cap Congress and this President for doing a lousy job. Roll back their pay and perks.
WHY are health insurers profits so weak? Most large companies figure out a way to balance their income and expenses to deliver somewhere in the neighborhood of 10% operating earnings. So, seriously why are the health insurers weak?
Here are several hypotheses for consideration:
A) They have poor management: likely not since as a group they are mostly in the same poor performance bucket; one or a handful of companies? Sure this hypothesis would hold up, but in a free market, at least a few companies would kick ass if it were management quality.
B) They have a soft market for services: this is obviously not the case, most people perceive a need and are willing pay to satisfy that need.
C) Regulation and mandates: if the rules (i.e.- what you can offer, what you can charge, and even worse what you can't) completely describe the game, then good or poor management, attractive geography or not, good service or not… it just doesn't matter. I can't seem to refute this one.
Any other ideas out there?
Intellectually dishonest? Let's call them what they are, flat-out dishonest.
D) The margins are suitable for their market and cost stuctures. Not all companies achieve a 10% net – Grocery chains live on tiny slivers of net income, for example. If the shareholders don't like the results, then they can vote with their dollars and not by the stock. It's not the government's business to regulate private company profits. That said, Medicare has created huge cost structure distortions, and has shifted losses to the private sector.
Democrats are great for demonizing companies. Look at how they demonized the oil industry if you think what they are doing to the health care industry is unique. Dems couldn't survive unless they were pitting the public against "evil corporations and the ogres of greed" that run them. Heh, sounds almost like a video game.
Insurance companies compete on premiums (prices). Some of their income comes from investing the money they hold in reserve. They eventually pay out almost all of the premiums collected, relying on investment income as part of their overall business model. Their investment income has fallen recently, something that they can't control and didn't predict.
EasyOpinions.blogspot.com
Related parody: Obama Credits Handful of Green Eyeshades with His Decision to Radically Reinvent Entire Health Care System http://optoons.blogspot.com/2009/09/obama-credits...
In a truly free market, the best companies would rise to the top and be successful, the bad companies would PROPERLY go out of business. When companies are prevented from doing business across state lines because of some regulation, or forced to cover things that people don't want or need covered – that's NOT Free Markets.
[...] Read the rest here: Big Government » Blog Archive » FACT CHECK: Health Insurers … [...]
You have it in C).
Health insurers are closely watched by the various state insurance commisioners who act as "guardians" for their citizenry.
For that reason health insurers face obstacles in turning profits:
1. When a block of business turns out to cost more than actuarily assumed the company has to prove to the state commisioner that a raise in rates is necessary………the state will take time to analyze this and will try to hold down rate increases.
2. Even worse, if a line of business turns really bad the health insurer cannot typically pull out because, again, the state will take the position that the company cannot do that. This isn't necessarily bad, especially for the insureds, but it puts pressure on an insurer to make up this loss somewhere else.
I could go on but I don't think anyone would read it.
If you are tempted to think the state or feds could do it better just keep in mind that when the government gets involved they typically will lose more in fraud and abuse and poor management than the insurer makes in profits (typically in the 3 to 4% range).
[...] profit margins typically run about 6 percent, give or take a point or two. The rest is here: Big Government » Blog Archive » FACT CHECK: Health Insurers … Share and [...]
[...] reading here: Big Government » Blog Archive » FACT CHECK: Health Insurers … October 25th, 2009 | Tags: a-broad-array, anemic-compared, broad-array, even-some, forms, [...]
[...] and a panoptic clothing of industries, modify whatever beleaguered ones. … Excerpt from: Big Government » Blog Archive » FACT CHECK: Health Insurers … Posted in Insurance, Uncategorized, health | Tags: consequence, genuine, insurance-profit, [...]
Don't be fooled… this isn't about healthcare, it's a power grab. Healthcare is VERY big business, but just one huge piece of the economy that statists wish to control. Look at the changes they're making. After seizing the banking and automotive industries, healthcare is next on the table; then energy business–all while destroying small business and devaluing the dollar beyond repair. Wake up folks!! It's past time to fumigate Washington of ALL of these TRAITORS to freedom loving Americans!!
It's official, investing in a health insurance company is now a public service. You can get better returns in long-term bank CD's, guaranteed, let alone with possibly a hundred or more financial opportunities, and that's just in the US. With practically anything else in the economy where investors typically go for solid consistent profits now in the tank, insurers still look good, somewhat. But as the "righteous" demonizing goes onward with the liberals' self-prophesied crackdown on these "evil" companies, investors may well flee leaving the companies to collapse.
Which will leave many millions of uninsured who cannot even buy a policy. Which is what Barry and cronies want, still more justification for a "public option." Beat the horse until it is dying, is dead, go a little longer, then insist on the obvious need for a government-supplied horse due to the shortage. Yup, sounds about right for that lot.
Biggovernment website just declared unsafe by Microsoft Smartware for Explorer when I came to it. What is up with that and who was the stupid hippie at Microsoft that thought this was a smart move.
Makes me worry about what the hell Smartware does to protect my computer against actual threats.
"Makes me worry about what the hell Smartware does to protect my computer against actual threats." Wonder no longer, it's it obvious what they consider a threat. Use Firefox instead.
Obama said the insurance companies are lying crooks so they must be, Obama said
Plus 99.9% chance that means one of the advertisers to the site had an ad that tried to do something IE did not like, perhaps trying to "trick" IE into launching a pop-up window through one of the security holes. Also MS could have (surprise!) discovered another security flaw and flagged what was previously an accepted action until it determines to fix it or ignore it. The ultimate longshot, which is what in theory it should be notifying you about, is that the site itself is running some sort of malicious code. If you think this site is capable of doing that, then you shouldn't be here anyway.
Get Firefox, ignore IE, problem solved. Then you can also get the Adblock Plus extension (plug-in) to specifically block the more annoying advertisers. You can also get Flashblock to keep your system resources from getting gobbled up on stuff you do not want.
[...] the original post here: Big Government » Blog Archive » FACT CHECK: Health Insurers … October 25th, 2009 | Tags: anemic-compared, even-some, forms, give-or-take, insurance-and, [...]
[...] See the rest here: Big Government » Blog Archive » FACT CHECK: Health Insurers … [...]
[...] See the original post: Big Government » Blog Archive » FACT CHECK: Health Insurers … [...]
If you use firefox you are in greater, not less danger of crashes and malware. Look a lot of educated people believe that IE is a POS and they have a lot of valid points but the truth is this IE is the only browser that can even get close to having protection running under windows. No other browser integrates as well with the operating system. Before the Mac Daddies come out, yes Macs do not suffer the same issues but they do not really operate in the same environment. Mac OS has plenty of security issues, its just no one cares and no one invests the time for so little return.
More likely the problem is malware already installed. Firefox would not block, stop, or otherwise help.
[...] Originally posted here: Big Government » Blog Archive » FACT CHECK: Health Insurers … [...]
[...] is the original: Big Government » Blog Archive » FACT CHECK: Health Insurers … Comments [...]
Ideologues who oppose profit as a matter of principle are just the people who will bring our economy surging back and create jobs.
In Bizarro World!
[...] Here is the original post: Big Government » Blog Archive » FACT CHECK: Health Insurers … [...]
[...] See the rest here: Big Government » Blog Archive » FACT CHECK: Health Insurers … [...]
I can't believe it took so long for someone to report this. If the press has been saying it, I haven't seen it.
[...] Follow this link: Big Government » Blog Archive » FACT CHECK: Health Insurers … [...]
What's the profits % for a Congressman? Be fair, consider all venues, deals, Pay, perks, lobbyist, write-offs, and special knowledge of things to come. Is it as much as the Insurance Industry? Just asking.
Um….maybe 2,000-4,000%? Or is that low?
Good story. The only thing that's surprising is that it came from AP and they didn't bury the story as it doesn't fall in line with Obama's theme.
Social comments and analytics for this post…
This post was mentioned on Twitter by MasterDoji: http://bit.ly/7GcNH not so fat profits….
Seriously!! Back in the summer I told someone that Health Insurance companies made only a 2-3% profit and she didn't believe me. I told her to look it up and get informed. I hope she did.
Hey, just what we and future generations of taxpayers need: Vast new opportunities for out-of-control government health care fraud!
Philip Klein at the American Spectator reports:
Guillermo Denis Gonzalez was released from prison in Florida in 2004 after serving 12 years for murder. By the end of 2006, he owned a health care business officially licensed by Medicare.
This August, the Miami Herald reported that Gonzalez pled guilty to filing $586,953 in phony Medicare claims for supplies that were never given to any actual patients — but this was only after he was arrested for murdering and dismembering another victim, to which he also confessed.
While it’s shocking that government policing efforts are so lax for Medicare that even a convicted murderer can be granted a license to sell equipment and file claims, Gonzalez is actually a small player compared to other cheats. Last June, for instance, the Washington Post ran a story about a high school dropout who scammed $105 million from the federal government by filing 140,000 fraudulent Medicare claims, buying herself a Mercedes-Benz and two condominiums with a portion of the proceeds.
The rampant fraud in existing government health care programs is nothing new, but the problem warrants increased attention given recent reports of growing momentum behind Democrats’ push to create a new government-run program modeled after Medicare.
Earlier this week, the Hill reported that House Democrats were discussing rebranding their so-called “public option” as “Medicare Part E,” or “Medicare for Everyone,” in hopes that it would be an easier sell. And on Thursday, ABC News cited sources who said that Senate Majority Leader Harry Reid planned to include some form of a government plan in Senate legislation.
“I thought the government plan was dead,” Republican Sen. John Thune said during a Wednesday conference call with bloggers. “I don’t think that anymore.”
Proponents of creating a new government plan argue that Medicare is much more efficient than private insurance and boast that it has administrative costs of just two percent. The number is highly misleading in that it doesn’t include many expenses that would be considered when calculating administrative costs in the private sector, because those expenses show up elsewhere in the federal budget. Examples include the cost of tax collection, office space, and staff salaries. The true administrative cost of Medicare is more like 6 percent to 8 percent, according to a 2006 report by the Council for Affordable Health Insurance. But to the extent that Medicare does have lower administrative costs than private insurance, the programs’ defenders ignore one of the consequences: lax oversight of claims that leads to widespread fraud.
Ironically, President Obama has insisted that he will cut several hundred billion dollars out of Medicare’s budget without affecting benefits simply by eliminating waste, fraud, and abuse — yet he simultaneously makes the case that creating a new government plan is necessary to improve efficiency in the health care system.
You've got to be kidding. First of all, you've got your facts wrong, Calvin ole boy. Health insurance skims 20% off the top of $2.5 BILLION dollars every year. Of that they make over 6% profit — by every other report — other than yours, pal. And for that we get cancelled coverage, pre-existing limitations, 37th care in world standards, no preventative health, state monopolies, and 50,000 paid TROLLS (like you it seems) trying to convince us all that TeaBaggers are neutral little pathetic citizens.
This news article is unfit to wrap fish. Calvin, go work for Blue Cross where you belong, clown.
Proof?
Show us these "other" reports, please.
You brought it, and even with name calling, so back it up.
In Chicago, there are no coincidences.
In Chicago-on-the-Potomac, there are no coincidences, either.
In the desperate push for Obamacare, the White House spin doctors are pulling out all the stops to distract from the disastrous numbers by ginning up emotions.
FLOTUS is playing the the concerned parent card.
So is White House senior adviser/Astroturf master/Big Pharma beneficiary David Axelrod, who appeared on 60 Minutes with Katie Couric this weekend to talk about the epilectic daughter he never sees because he’s so busy trying to salvage his boss’s government health care takeover plans. The AP dutifully recycled the story — which itself had been recycled from February’s Parade magazine.
Ann Kane at the American Thinker is dead on:
This is all very noble, until we look at who the advisor to the president really is: a PR man par excellence. No matter what he says, even lovingly about family members, he will always be under suspicion for promoting a brand. That’s just the way it is with professional spinners. So, when the going gets tough for him and the White House, the tough create a soft news story.
Cynically-timed puff pieces on Axelrod = “news.”
Investigative commentary on and analysis of Obama’s radicals and subversive policies = “Not news.”
What’s next? A prime-time special on how Rahm Emanuel nursed his grandmother back to health?
[...] Big Government » Blog Archive » FACT CHECK: Health Insurers Profits Not So Fat (tags: healthcare health insurance business profit) [...]
[...] by taoist in Democrats. Tags: Dishonesty, Insurance Companies, Lies, Margins, Profits trackback This time with insurance companies. Just like they so frequently do with pharmaceuticals or oil companies, the Democrats discuss the [...]
[...] Read the original: Big Government » Blog Archive » FACT CHECK: Health Insurers … [...]
Interesting article. Were did you got all the information from…?
Patricia, you are absolutely correct, it shows that you’re an authority on the subject. I admire someone that takes the pride you have and with your projecton of information. oSo when i actually do sit down to read material, I appreciate well written and organized blogs like this one. I have it bookmarked and will be back. Thanks.
Cool sites……
[...]we came across a cool site that you might enjoy. Take a look if you want[...]………
Online Article……
[...]The info mentioned in the article is some of the best available [...]………
Websites worth visiting…
[...]here are some links to sites that we link to because we think they are worth visiting[...]……
Our Trackback……
[...]very few websites that happen to be detailed below, from our point of view are undoubtedly well worth checking out[...]………
Awesome website……
[...]the time to read or visit the content or sites we have linked to below the[...]………
Awesome website……
[...]the time to read or visit the content or sites we have linked to below the[...]………
You should check this out……
[...] Wonderful story, reckoned we could combine a few unrelated data, nevertheless really worth taking a look, whoa did one learn about Mid East has got more problerms as well [...]………
You should check this out……
[...] Wonderful story, reckoned we could combine a few unrelated data, nevertheless really worth taking a look, whoa did one learn about Mid East has got more problerms as well [...]………
Great website…
[...]we like to honor many other internet sites on the web, even if they aren’t linked to us, by linking to them. Under are some webpages worth checking out[...]………
You should check this out……
[...] Wonderful story, reckoned we could combine a few unrelated data, nevertheless really worth taking a look, whoa did one learn about Mid East has got more problerms as well [...]………
Great website…
[...]we like to honor many other internet sites on the web, even if they aren’t linked to us, by linking to them. Under are some webpages worth checking out[...]………
You should check this out……
[...] Wonderful story, reckoned we could combine a few unrelated data, nevertheless really worth taking a look, whoa did one learn about Mid East has got more problerms as well [...]………
Cool sites……
[...]we came across a cool site that you might enjoy. Take a look if you want[...]………
Best Links 2011…
Wonderful beat ! I wish to apprentice while you amend your website, how could i subscribe for a blog site? The account helped me a acceptable deal. I had been a little bit acquainted of this your broadcast provided bright clear idea…
Best Links 2011…
Hey There. I found your blog using msn. This is an extremely well written article. I will make sure to bookmark it and come back to read more of your useful info. Thanks for the post. I will definitely return….
Best Links 2011…
I like what you guys are up also. Such intelligent work and reporting! Keep up the superb works guys I have incorporated you guys to my blogroll. I think it will improve the value of my website
…
Awesome website……
[...]the time to read or visit the content or sites we have linked to below the[...]………
Best Links 2011…
Great beat ! I wish to apprentice while you amend your web site, how could i subscribe for a blog site? The account aided me a acceptable deal. I had been a little bit acquainted of this your broadcast offered bright clear idea…
WOW! check this out!……
Amazing Post, worth a read……
Best Links 2011…
I’m not sure where you’re getting your info, but great topic. I needs to spend some time learning much more or understanding more. Thanks for wonderful information I was looking for this info for my mission….
Potato And Leek Soup job, Your occupation is an excellent information of why I fix future side to register your statement…
job, Your occupation is an excellent information of why I fix future side to register your statement…
Minecraft Texture Packs Thanks solon for intercourse this online. I certainly dear every bit of it….
Thanks solon for intercourse this online. I certainly dear every bit of it….
herbal remedies It’s a goodish dishonour you don’t include a relinquish money button! I’d definitely springiness money for this wonderful webpage! That i imply for the example i’ll be mitigated bookmarking with including an individual’s Supply that l…
It’s a goodish dishonour you don’t include a relinquish money button! I’d definitely springiness money for this wonderful webpage! That i imply for the example i’ll be mitigated bookmarking with including an individual’s Supply that leave my superfine …
download apk This is the rectify journal for anyone who wants to act out out nigh this substance. You attending so such its near effortful to represent with you (not that I really would want…HaHa). You definitely put a new on a topic thats been typew…
This is the rectify journal for anyone who wants to act out out nigh this substance. You attending so such its near effortful to represent with you (not that I really would want…HaHa). You definitely put a new on a topic thats been typewritten nigh for…
You must be logged in to post a comment.