Posted on 10/25/2009 6:54:49 AM PDT by engrpat
WASHINGTON (AP) -- 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.
(Excerpt) Read more at hosted.ap.org ...
They left out one very important fact: The government profits over 20% off of the average worker. Some much higher but some lower.
So where do the billion dollar bonuses come from?
Well over one month ago, Mark Levin cited statistics that showed the insurers were operating on a 3% profit margin, compared with 9% for the beverage industry. This isn’t really news to us, though it may be to “them”.
Cons need to do a much better job of getting their info across, but I know it’s hard when the MSM is operating as the Fifth Column, and when the GOP is in a state of confusion about what its message is.
If profits were as “fat” as Jay Rockefeller claims, why doesn’t he start his own health insurance company, using the Rockefeller fortune, the Kennedy money, and the John Kerry Heinz money?
Billion dollar bonues in the insurance industry? Care to be a bit more specific? Hmmmmmm?
i saw a figure somewhere that said 44% of health insurers are non profits like BCBS, kaiser etc. ????
If 1/6 of our economy is related to health care/health insurance, then 2-6% is a lot of friggin money.
The majority of health insurer profits come from investments they make with premiums.
Most depend on these investments to stay in business.
LOL. Is this a joke?
And for the moderators who complain about sites not referencing this site I will now put this up as a reference point.
Oh dear. Are we now going to hear that “AP isn’t really a news wire?”
Guess you can add the AP to Obama’s enemies list.
United’s CEO Willima McGuire. Got himself caught up in an options backdating scandal and was forced to resign in ‘06...with, naturally, a golden parachute of over $1 Billion in new options.
thanks
Personally, I wouldn't invest in either. Both possess too much downside risk. And when you make insurance a “personal right”, that downside risk will get very much worse. Abuse, waste and overuse will become even more endemic.
The public option is a colossal boondoggle conceived only for its negative effect and the collectivization of the country.
Without real competition and chose in the industry, I’m not going take this margin as relevant. Dems are wrong, but it’s also wrong to think this is how it should be.
I got curious and did the math on this months ago. General Electric looks like the U.S. Mint compared to United Health Group. The telling numbers are the gross margins. Revenue for UNH are basically premiums. GOGS are basically the insurance payouts. UNH's gross margin for last year at 7.7% pales compared to GE's at 54%. UNH's net profit margin for 2008 was 3.7% compared with 9.5% for GE.
Think about that one for a minute. For UNH, this is a comparison of money in to money out. How many charities have overhead of less than 10%?
These are facts which have been out there for years for the mainstream media to take a few minutes to examine and analyze. They willfully have chosen not to.
As for "immoral" profit margins, it is not the size of the margin nor the size of the actual dollars which make a profit immoral to a Democrat. The view of the Democrats is any profit whatsoever is immoral in the business of health insurance, and also in the businesses of investment banking and petroleum processing. Apparently there are no such moral restrictions on Hollywood and other "acceptable" commercial endeavors.
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