Health Insurance Companies' Profit Margins: Not so Fat

posted by Doc_M

3 weeks 4 days ago • 326 views

The AP has fact-checked recent Dems who have claimed that health insurance profits have been "obscene" and "immoral" while "bodies pile up" and has found them to be full of hot air if not intentionally deceptive:

http://rss.msnbc.msn.com/id/33470129/ns/politics-health_care_reform/

Last year, the average health insurance company's profit margin was a measly 2.2%, but after you hear Dem representatives talk about it, you'd think it was near 40%. But last year was slow right? What about the average year? That must be the obscene number they're talking about right? 6% ...

You can argue that we would benefit from a federal insurance system or not, but let's not make stuff up out of thin air and call it scary truth. You can't form and informed opinion when your information is misinformation. I'm tired of all the major arguments being based in "feelings," sob stories, and skewed numbers. Half of the arguments are deceptions and the other half are fallacies.

I don't have the answers, but I certainly have learned who not to look to for them, and they all work in the same building.

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I guess when it comes down to it. The argument is whether you want to keep your money with a company that is bottom line-oriented that'll make choices based on both regulation and that bottom-line or giving your money to the boondoggle of a system the government runs (with no promise of better services or coverage).

I'd have to say even with more of a "free market" approach like we see in the car insurance industry, the market still drives the price so there's still very little control over what your rate is and people would still get screwed over.

The only option would be to have a government that could run our healthcare program efficiently, but that's a laughable dream.

*ahem* DMV, *ahem* department of development services, *ahem* public school system, *ahem* IRS...

For those of you that don't know how government accounting works, it goes as follows: If you do well and don't spend all of your budget, you get less money in your budget the following year. If you do spend that money or you go over that amount you get more in your budget. This behooves government agencies (local, state and federal) to often do things with your money that is not necessary so that they make sure they get their share the following year.

written by rottenseed

| 3 weeks 4 days ago | CH

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You can argue that we would benefit from a federal insurance system or not, but let's not make stuff up out of thin air and call it scary truth.

I couldn't agree more. Let's start with the lie about death panels. Then the lie about government takeovers. Then the lie about taking away benefits from old people. Then the lie that it'll bankrupt the country. Then the lie that wait times will go up. Then the lie that innovation will stop. The lie that you'll have a "government bureaucrat between you and your doctor". The lie that the proposed plans will kill small businesses.

In a related note, fear mongering about the H1N1 vaccine should stop too.

But back to your pet peeve on display here about "obscene profit" -- if you think the main, central argument Democrats have been using is for reform is that we need to punish insurance companies for the crime of having made a profit, you haven't been listening to Democrats. You've been listening to the talk radio/Fox News caricatures of Democratic positions instead.

I think it's pretty safe to say that what makes the profits "obscene" is not their size, but that they're coming amongst a backdrop of worsening service, and shrinking coverage base. As MoveOn put it, "Health insurance companies are willing to let the bodies pile up as long as their profits are safe." That's not a comment on the size of profits, it's a comment on how those profits were achieved.

written by NetRunner

| 3 weeks 3 days ago | CH

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I think what the Doctor is trying to say isn't that we're punishing insurance companies for making obscene profit, but that they're doing it at our expense. That they'll just go around dropping coverages and making it cost too much to have insurance. But they're not making money hand over fist, so, what are they supposed to do differently. And do we really trust the government to take over a mildly profitable industry and keep it from becoming another addition to our deficit.

written by rottenseed

| 3 weeks 2 days ago | CH

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In my eyes, giving the government control of our healthcare is like giving a fugative a gun. You know they're going to screw up and someone's going to get hurt because their record so obviously says they will. Seed is right. It comes down to whether you actually trust the feds to run this well. History, even very recent history, says NO. To ignore that history is to blind yourself and close your mind. Look at all the businesses that the government has taken over. NONE of them has really succeeded. They've all been laughable sinks of tax money and even more laughable in general opinion of their work.

written by Doc_M

| 3 weeks ago | CH

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Also, I should say that a company is SUPPOSED to make money. If they aren't, than they're doing something wrong. That's the way that a successful capitalist market works. If you don't like capitalism, that's another argument entirely, but in this society... the most successful economic society in the history of the world... you must make profit as a company to survive as a company. To expect an independent company to LOSE money in any given time is just foolish. In addition, we expect the same of our tax dollars. We expect that the services that our taxes provide are worth more than we are spending to provide them. We therefore expect profit, not loss. Yet our government is notorious for spending outrageous amounts of money for even simple services. I would cite examples, but any idiot could find 20 in 2 minutes with google. The bottom line is that the government is responsible to no one when it comes to one detailed and complicated issue. You may say that they're responsible to voters, but most voters don't pay any attention to this sort of thing. Anyway, the tax-payers don't have a vested interest that they can plainly see in this. A COMPANY has investors that are constantly studying performance reports, and these people understand the business. They, if anyone, are the ones you want to win over, not congressmen.

written by Doc_M

| 3 weeks ago | CH

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Don't get me wrong, I'm all in favor of regulation. In fact, I took a very significant and active roll in requiring insurance companies in my state to insure at least a certain minimum percent coverage of mental illnesses. I see government oversight as valuable. As I referred to history earlier, I refer to it again saying that oversight of this kind works. Overarching control, however, never has.

written by Doc_M

| 3 weeks ago | CH

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The problem Doc_M, is that profit for a health insurance company does not coincide with the optimum well being of patients. In many ways these drivers run counter to each other.

And do you not realize that when the government overpays for a good or service, they are most likely paying it to a for-profit company?

written by longde