Not really:
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.
About the only industry I can think of that operates at similar margins are grocery stores. If you want to argue that the government would do a better job than private insurers, fine. Go right ahead. But let's give this "obscene profit" thing a rest.
30 comments:
but they wont.
obamabots need the big lie to sell their plan. and they've been lying about it all along.
and thats how it works.
you show an O-bot the evidence, they'll just ignore it, and keep spouting the line...
or point out how the CEO made 'x' dollars last year, which isnt relevent at all to the issue.
and you are a racist tea bagger thug to even bring this point up.
and you are a racist tea bagger thug to even bring this point up.
Badge of honor, baby!
I believe margins at grocery stores are a lot higher, at about 4%, actually.
Historically, airlines and disk drive companies have margins around 2%, though. That changed a little when Quantum and Maxtor went into tech history, but not that much. At one point, it was said that the net profit of the industry was probably about zero.
Thanks for the context, BB. It was even worse than I thought. I happened to hear some shark from Robins, Kaplan on the radio today jabbering about the evil insurance companies and how much money they make. I wanted to ask him how much money he made -- bet it's more than the people he was pillorying.
You're right. The only reason that matters, for "foisting Obama Care" on the country, is the shameful fact that the US is the only industrialized nation in the world that doesn't guarantee coverage for all of its citizens.
amanda, and we are also the industrialized nation first chosen when kings and queens from other nations need state of the art healthcare.
Shameful? Why? Is the US government abrogating its stated responsibilities? Is it illegal? Or are you saying that it is morally wrong, aside from any legal responsibility, for our government not to provide everyone with health care?
Are there other things that our government has never done that it needs to do so that we might not be covered in shame? Why is it necessarily the government that needs to be the guarantor of these things?
Does that make those of us who are not statists shameful by definition? Is it necessary to support the public option in order to be a good person? Or is it morally acceptable to believe that health care might be better reformed by other means? Are people who value personal liberty over state-guaranteed benefits reprehensible?
In answer to all of this I say bologna. What we have here is "rights inflation." Health care is not a right. You know what health care is? It's an excuse for politicians to mess with our lives for their own benefit. It's a fetish for people who want everyone else to know how compassionate they are. And the whole thing is just going to get worse and more expensive the more "compassionate" we get. A government must never become compassionate. A "compassionate" government is making value judgments about people, throwing out the rule of law in favor of picking winners and losers. That is base corruption. And that is shameful.
Mark,
Isn't this a bit of a straw man? I don't have a problem with insurance companies. Hell, I have done quite a bit of work for them, and my last full time job was with First Health (now Coventry). The issue with health insurance companies is much more complex than net profits.
Health Care Reform is primarily about two things: accessibility and affordability, and the simple truth is that private insurance companies aren't interested in providing coverage to a large percentage of the American public because actuarial charts show that many folks are a bad risk. In that regard, insurance companies are the elephant in the living room. Not tort reform; Not doctor's pay; Not the cost of basic medical care, etc.
Ultimately, this becomes a moral issue - should we support insurance companies and their inherent profit motive - which causes incessantly increasing rates, continually diminished doctor pay, diminishing reimbursements to hospitals and medical providers, and ever increasing and draconian decisions to deny care for a whole list of reasons for those who have insurance; or do we reform to a system in which Americans can rely on basic medical care without having to go bankrupt to obtain it?
Am I supposed to be impressed that Saudi Princes want to come here for their medical procedures? That will be cold comfort in bankruptcy court.
As for profit margin issue, I thought that it was a 3.3% profit margin. I have that number fixed in my head, and will try to find it...maybe that was last year. Regardless, that number becomes a much bigger deal once you realize that health insurance fundamentally is little more than a shared checking account. People pay in and the insurance companies pay out. What bank wouldn't love to take 3.3% or even 2% of all money we deposit? Especially when you are talking about 15% of the U.S. GDP.
But that's not even half of it. The profit margin is after expenses, which the insurance companies generate a ton of. Especially in Executive compensation. So it may be closer to having a bank that takes 10% to 30% of all the money you deposit. Doesn't seem like such a bad deal to me.
Regards,
Rich
Here is a very interesting link that shows why looking just at profit margin as a metric can be very misleading:
http://economix.blogs.nytimes.com/2009/09/25/how-much-money-do-insurance-companies-make-a-primer/
Rich
Rich,
It's not a straw man. It's not the entire argument about health care, either, which is what both you and Amanda want to make it. Which is fine. But it's not the argument I'm making here.
I made a simple point -- the business about "obscene profits" is crap. I heard a trial lawyer on the radio today. His firm sues insurance companies. Which is fine. His firm's profit margin on the settlements he makes are a lot larger than 2%, 3% or even 10%. And that's fine, too. More power to him, if he can get by with it.
And if you and Amanda want to turn health care over to the government on moral grounds, I'd posit this: what current governmental health initiatives are moral. Medicare? Medicaid? VA hospitals?
Whack that straw man, Rich!
If one wants to guarantee medical care, one ought to at least consider the results--long waits for simple procedures and elevated death rates from things like heart disease and cancer.
I've noticed the left side of the aisle emphasizes metrics that involve other factors than medical care--infant mortality, for example, involves all kinds of factors (race, drug use, etc..) besides medical care. The right is emphasizing the outcomes where person A comes in with condition B, what is the result?
I obviously view the latter as a better metric; given that there are other differences between us and Europe or Canada, we need to take a look at what each medical system does with a person with, say, colon cancer. And in that metric, there is no comparison; free markets are far batter for both rich and poor.
The biggest problem I have is that the Insurance Companies are the only ones that seem to get consistently bashed.
What about the health care providers who double and triple bill with non-transparent pricing. When I go McDonalds, I can get a Big Mac and know what I will be paying? That's not the case if I break my leg and go to the emergency room.
What about trial lawyers and the expense that litigation has on the system? We can't talk about them because they are part of our constiuency.
What about consumers who run to the emergency room for a cold? Or the intentionally uninsured who roll the dice with insurance because they know they will be treated (Yes Amanda everyone may not be insured, but they most definitely can go and get treatment) declare bankruptcy and still the system?
What about the Pharmaceutical companies who sell products in the US for a high amount, and then sell the SAME drugs in other countries for pennies on the dollar?
The problem that I have with the health care reform is that it isn't addressing the major issues that need to be addressed. Instead it the classic Rich Man Black Hat, Poor person White Hat, Soak the rich BS we've heard from politicians for years. They could care less about really fixing the sytem. If they did, they'd be addressing all of the issues, and not skipping the ones that would hurt their constiuencies.
Good comment, anon. All of those problems need to be addressed as well.
And here's the question for everyone: are you confident that Harry Reid, Nancy Pelosi and Barack Obama understand all the variables well enough to design a solution? If so, why?
Mark,
are you asking me if I think that providing a guarantee of medical coverage to the elderly, the poor and the veterans of our country, which is the purpose of Medicare, Medicaid and the medical wing of the VA, is a moral endeavour? Especially in light of the fact that these groups aren't particularly well served by the employer-based system that has been implemented so haphazardly in this country since WWII. My answer is a simple and straightforward yes, I do.
Rich
I'm not asking you about the intent, Rich. I'm asking you about the results, in which we'll be looking at bankruptcy quite soon (for Medicare and Medicaid) and the often scandalous conditions in VA hospitals throughout the country and throughout Republican and Democratic rule.
Given the history involved in these programs, do you really want to give the government a larger role?
Mark,
You say this as if the current private health care system is viable and efficient. I can't help but note that Medicaid has been chronically under-funded since its inception, and Medicare was modified with a relatively unnecessary and unfunded drug program that is the biggest reason for its projected deficits. As for the VA, I can only tell you that, while there have been highly public instances of neglect and shoddy work at some VA and active duty hospitals, all of the anecdotal evidence I have seen, from my cousin's recent hospitalizations in Germany, and then at Great Lakes Naval Base Hospital, to my Father's ongoing treatment at Hines VA hospital in Chicago have been exemplary. So I don't really buy into the notion that the Private system is so much better than the public systems you are bashing. Also anecdotal, I was taken from a medical office to a hospital in an ambulance last month to receive emergency surgery. My doctor called ahead and instructed the Emergency Room staff of my condition, the fact that I was highly contagious and needed to be isolated, and that emergency surgery was needed. I was instructed to wait in the ER general area with everyone else, and was CHECKED IN (not attended to) three hours later. It was 7 hours before I even got prepped for surgery, and it was not busy at the time. So I am not all that enamored of the current health care system. Combine this with the continuing decline in employer-sponsored coverage, which means that even middle-class Americans are just one downsizing away from losing health insurance altogether, and again, my answer is an emphatic yes. I am ready to trust the government to oversee health care.
Your beliefs that greater governmental involvement will necessarily be negative might be understandable if it were the unavoidable consequence of an otherwise well-functioning health care system. But it is not. If I learned anything in Econ classes, it was that a balance between efficiency and equity is inevitable. And currently, medical care in this country is inequitable and grossly inefficient. We pay more per capita for our health care than any other industrialized nation, but we fail to adequately cover a large and growing portion of our middle and under class. To me, that doesn't sound like money well spent. It sounds like a system needing revision.
Rich
If you thought you waited a long time for emergency surgery, Rich, just wait until you're subject to the tender mercies of the government.
I don't pretend the current healthcare system is perfect. Never said that. I do know that the efficiencies built into the system are systemic and are mostly because we don't have price transparency. No one really knows what health care costs because in too many cases providers charge whatever they can, simply to cover the costs they eat from people who use the system and don't pay.
I do know I can match you anecdote for anecdote, though, and my experiences have been uniformly good under the current system. And I've had brain surgery done and my daughter has had her cleft lip and palate repaired by a world-class pediatric plastic surgeon, along with a half-dozen followup surgeries she's had as she's grown. In that time I've had several different insurance providers (Health Partners, BCBS, Aetna and Medica) and they've all paid, every time.
The one sentence in my last comment should have read:
I do know that the inefficiencies built into the system are systemic
Mark,
quite honestly, I don't expect us to ever agree on this. This is a classic example of where libs and cons disagree. But I will point out that the Right had ample opportunity over the last 8 years to address the growing problems with the current system, and they chose to ignore or exacerbate it. So if it was so easy to fix and the fix could be market driven, then why wasn't a fix even attempted? You would think that the party in power would be happy to address an issue this important that affects so many people.
Rich
So if it was so easy to fix and the fix could be market driven, then why wasn't a fix even attempted?
Three reasons I can think of:
1) The war
2) There was about the same level of cooperation from your side of the aisle then as Obama is getting now. The Republicans never got to 60 votes in the Senate. Even though the D's have 60 votes de facto, it still may not be enough.
3) There were other agendas that the Bushies wanted to pursue, especially Social Security. And you saw how well that worked.
You would think that the party in power would be happy to address an issue this important that affects so many people.
You would think that, Rich. But there were a hell of a lot of people on your side of the aisle that couldn't take a chance of having market-based solutions implemented, on the off chance they might work. And because of the presence of the Ted Kennedys of the world, Bush knew he had no shot to pursue any agenda related to health care. So he chose to take on Social Security instead. And got his ass kicked. And now it's Obama's turn to get his ass kicked.
i dont want to hear anybody ever say again that we a free market in health care. we do not.
next one to say it gets knocked up side the head.
rich: maybe you had to wait behind all those wetbacks who are guaranteed treatment ahead of you?
Mark,
you said
"But there were a hell of a lot of people on your side of the aisle that couldn't take a chance of having market-based solutions implemented, on the off chance they might work. And because of the presence of the Ted Kennedys of the world, Bush knew he had no shot to pursue any agenda related to health care."
You can't be serious. What was Medicare Part D? It was precisely that: a Republican led and allegedly market-based initiative that massively expanded Medicare Drug coverage that was based upon the notion that private insurers, and not the government should be put in charge of providing drug coverage to seniors. And the results were chaotic. Seniors were utterly baffled trying to figure out which plans cover which drugs, how to best negotiate the infamous "Part D donut," and many of the sickest and poorest beneficiaries were unable to get their prescriptions during the program's early days. The only benefits the program delivered effectively were subsidies to insurance companies and greater profits to Pharma manufacturers who didn't have to negotiate prices with the government. (This was later amended by legislation introduced in the House by John Dingell).
And BTW, Part D was passed in the Senate following a cloture vote of 61 to 38, with the support of 14 Democrats, and a final vote of 54 Yeas (11 D's/43 R's) 34 Neas (25 D's/9 R's, and 2 D's abstaining). In other words, there was some pretty solid Democratic support for the largest overhaul of Government health care in over 3 decades. So saying that Dems wouldn't support a President Bush backed market reform in health care doesn't hold water. It couldn't have passed without key Democratic support. A whole hell of a lot more support than Obama is getting.
Rich
Amendment:
Should read "...and a final vote of 54 Yeas (11 D's/43 R's) 34 Neas (35 D's/9 R's, and 2 D's abstaining)"
Rich
Medicare Part D isn't an apples-to-apples comparison, Rich. It was an attempt to correct problems with an existing government program. It did not address what we're talking about now.
Oh, and before I forget -- I don't like Medicare Part D and think it's a disaster.
Mark,
you said "There was about the same level of cooperation from your side of the aisle then as Obama is getting now." and
"there were a hell of a lot of people on your side of the aisle that couldn't take a chance of having market-based solutions implemented, on the off chance they might work"
These are demonstrably incorrect statements, as I have already noted. And while this is admittedly not an apples-to-apples comparison, and I never claimed it was, it was a very large bill, historically and fiscally, and fits your description of a market-based solution.
Lastly, you said that Part D was an attempt to correct problems with an existing government program. No it wasn't. It was a largely unnecessary and misguided attempt to pander to the largest voting bloc in the country. But I think you know that;)
Regards,
Rich
Said I didn't like Medicare Part D, Rich. Still don't. And thanks for admitting that your comparison isn't apples-to-apples. :)
Rich,
Please address why your fellow libs fail to address Tort reform, and the other issues as outlined in my previous post. I'd specifically like to hear your response on these matters.
As for another matter, when did Bush have a fillibuster proof Congress?
I went to the doctor today for a minor issue. They took my vitals and my heart rate was a little elevated. the nurse asked me why and I said, which problem do you want to hear about? She said, "there are more than one, there is nothing on your chart" and I grabbed the chart and wrote "Obama, Pelosi, Reid" on it and she smiled and said "Oh, I see".
For those of you in MN that elected Al Franken, my condolences to those of you who now have a clown prince for representation. As if he cares what you think.
Good night.
40,000 Acorn Registered voters and Franken is your senator. What do Minnesotans really think about the electoral process>
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