Monday, October 26, 2009

Those Robber Baron Insurance Companies

I found the following article that confirmed my suspicions.

FACT CHECK: Health Insurers' Profits Not So Fat

WASHINGTON -- 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."

But in pillorying insurers over profits, the critics are on shaky ground. 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 Obama.

The debate is loaded with intimations that insurers are less than straight, when they are not flatly accused of malfeasance.

The insurers 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.

A look at some claims, and the numbers:


--"I'm very pleased that (Democratic leaders) will be talking, too, about the immoral profits being made by the insurance industry and how those profits have increased in the Bush years." House Speaker Nancy Pelosi, D-Calif., who also welcomed the attention being drawn to insurers' "obscene profits."

--"Keeping the status quo may be what the insurance industry wants. Their premiums have more than doubled in the last decade and their profits have skyrocketed." Maryland Rep. Chris Van Hollen, member of the Democratic leadership.

--"Health insurance companies are willing to let the bodies pile up as long as their profits are safe." A ad.


Health insurers posted a 2.2 percent profit margin last year, placing them 35th on the Fortune 500 list of top industries. As is typical, other health sectors did much better -- drugs and medical products and services were both in the top 10.

The railroads brought in a 12.6 percent profit margin. Leading the list: network and other communications equipment, at 20.4 percent.

HealthSpring, the best performer in the health insurance industry, posted 5.4 percent. That's a less profitable margin than was achieved by the makers of Tupperware, Clorox bleach and Molson and Coors beers.

The star among the health insurance companies did, however, nose out Jack in the Box restaurants, which only achieved a 4 percent margin.

UnitedHealth Group, reporting third quarter results last week, saw fortunes improve. It managed a 5 percent profit margin on an 8 percent growth in revenue.

Van Hollen is right that premiums have more than doubled in a decade, according to a Kaiser Family Foundation study that found a 131 percent increase.

But were the Bush years golden ones for health insurers?

Not judging by profit margins, profit growth or returns to shareholders. The industry's overall profits grew only 8.8 percent from 2003 to 2008, and its margins year to year, from 2005 forward, never cracked 8 percent.

The latest annual profit margins of a selection of products, services and industries: Tupperware Brands, 7.5 percent; Yahoo, 5.9 percent; Hershey, 6.1 percent; Clorox, 8.7 percent; Molson Coors Brewing, 8.1 percent; construction and farm machinery, 5 percent; Yum Brands (think KFC, Pizza Hut, Taco Bell), 8.5 percent.

I am shocked the Democrats would lie about profits.

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Anonymous Perri Nelson said...

I'm not shocked that the Democrats would lie about profits...

"Few in the debate seem interested in a true balance sheet."

I'm afraid that I am one of those that are not interested in the balance sheet. Whether a government health care plan is cost neutral, drives costs up, or reduces costs is NOT the issue as far as I'm concerned.

All I care about is that ANY government run health care plan at the federal level does a few things that I don't like. Such as...

1. It violates the Constitution of the United States of America. Nowhere in the Constitution, nor in any of the 27 amendments to it is the federal government authorized to do this.
2. It tramples upon the rights of the States, violating the tenth amendment.
3. By mandating that all Americans buy health insurance or pay a fine - or go to jail for not doing either, it is an infringement upon our liberties.
4. Ultimately, it will result in the rationing of health care as it has already done in other countries with socialized medicine.

I am not for, and will never be for a federal socialized medicine plan of any kind. The Statements by the Democrats characterizing the profits of the insurance industry as "immoral" and "obscene" are so much smoke and mirrors designed and intended to distract us from the real issue - which is that the federal government has no right or business doing this in the first place.

That politicians on both sides of the aisle are considering it is "immoral" and "obscene" in mey eyes.

6:29 PM, October 28, 2009  
Blogger ablur said...

I'm with you Perri. I am amazed at how quickly our government has turned in the last 9months. Yes, it has been going on for almost 80 years, but the last several months we have moved faster then ever.

How can we not realize the breath of what we are giving up? You would think people would be protesting and using every means to remove these people form office. Yet, half of America welcomes slavery and the chains of government. The Free World is about to fall and many celebrate.

The ignorance is astounding. People seem to actually think it is Free.

I just can't help sitting here shaking my head in disbelief.

5:19 AM, October 29, 2009  
Blogger Joe said...

Perri is right on.

I posted this info a few days ago, but it seems that nobody in DC cares for facts...just emotion.

4:54 PM, October 30, 2009  

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