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| Topic: Health Insurers Profits Not Out of Line | |
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FACT CHECK: Health insurer profits not so fat 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. A look at some claims, and the numbers: THE CLAIMS _"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 MoveOn.org ad. THE NUMBERS: 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. ___ http://news.yahoo.com/s/ap/20091025/ap_on_go_co/us_fact_check_health_insurance |
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this is news? insurance companies have never had large profit margins.
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"Big Oil" is another that runs about a 3.5% profit
it just seems obscene in absolute numbers because health and oil are trillion dollar industries |
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Insurance seems to be a heartless industry, cant feel bad if they claim they arent making as much profit as others. Healthcare is a necessary expense for most people unlike those other industries and the whole medical field is guilty of using that fact to send people into bankruptcy while their ceos line their pockets.
I will be glad to see another option on the table. |
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duh, after they pay themselves far beyond what they are worth they show little profit, like the oil industry they pay themselves as much as they can andsay look we hardly made anything.
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another good point,,,bestinshow
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Edited by
heavenlyboy34
on
Sun 10/25/09 10:37 AM
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Insurance seems to be a heartless industry, cant feel bad if they claim they arent making as much profit as others. Healthcare is a necessary expense for most people unlike those other industries and the whole medical field is guilty of using that fact to send people into bankruptcy while their ceos line their pockets. I will be glad to see another option on the table. I don't see any evidence of "the whole medical field" doing this (health care practicioners often operate at a loss), but I do see evidence of this in industries like corporate pharma and corporate insurance-these corporations keep prices high because they have a VERY cosy relationship with government. You also neglect to mention that regulatory bodies like the FDA help keep prices high by adding costs through regulations. Then there's the spiraling costs of medicaid, medicare, and other government mandates which add to the problem. Note that these are not agents of the free market, but of the government. The aforementioned government programs also subsidize sickness, not health. Only the free market seeks to subsidize health (with vitamin supplements, healthy food, etc). |
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Insurance seems to be a heartless industry, cant feel bad if they claim they arent making as much profit as others. Healthcare is a necessary expense for most people unlike those other industries and the whole medical field is guilty of using that fact to send people into bankruptcy while their ceos line their pockets. I will be glad to see another option on the table. I don't see any evidence of "the whole medical field" doing this (health care practicioners often operate at a loss), but I do see evidence of this in industries like corporate pharma and corporate insurance-these corporations keep prices high because they have a VERY cosy relationship with government. You also neglect to mention that regulatory bodies like the FDA help keep prices high by adding costs through regulations. Then there's the spiraling costs of medicaid, medicare, and other government mandates which add to the problem. Note that these are not agents of the free market, but of the government. The aforementioned government programs also subsidize sickness, not health. Only the free market seeks to subsidize health (with vitamin supplements, healthy food, etc). There is little evidence of everyone in any group doing something. I will retract that statement as being a vast generalization. However, the fact that I see with my own eyes on my bills and the bills of those around me is that the medical field (in general, not as a whole) seriously OVERCHARGES for their 'services' and 'drugs'. I would like more of an explanation or example of regulations adding costs. It seems like regulations is a bad word in most topics on this thread. I know that medicare covers wellness visits such as shots and check ups and the like so I do believe it subsidizes health as well as illness. GREED has snuck its head into the business of health and illness and the average consumer is paying too steep a price for it....by average I mean people I know personally. |
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Get Sterilized Or Die: Insurance Company Tells Mother Her Fertile Womb Is 'A Pre-Existing Condition'
Just when you thought you’d seen all the health-insurance evil possible, now comes another shocker: a UnitedHealth subsidiary in Colorado denied coverage to Peggy Robertson, mother of two, because she wasn’t sterilized after her caesarian-section delivery procedure, according to a letter made public. Almost 1/3 of all deliveries are done by c-section–meaning that in Colorado and likely elsewhere, fertile women are regularly denied coverage unless they agree to sterilize their wombs. This comes after reports that a health insurance company considered rape to also be a “pre-existing condition.” The meaning is clear: America’s health insurance industry hates us all, and they hate fertile women most of all, if only because they represent two detestable Americans in one body. In the letter, UnitedHealth’s Colorado subsidiary tells Robertson that normally they would simply waive coverage on her womb for a period of three years following a c-section, but since Colorado banned pre-existing waivers, poor UnitedHealth had no choice but to deny the mother of two coverage of any sort [full letter below, hat tip to eXiled Online reader Tyler]: In order to consider coverage without a rider, we require certain requirements to be met. One requirement is that some form of sterilization has occurred since the caesarian section delivery. Also, women age 40 or over, who had their last child two or more years prior to applying for coverage, will not require a rider. The letter was dated 2007–that same year, UnitedHealth profits rose to over $4 billion, on earnings of over $70 billion, pushing the company’s Fortune 500 ranking up to number 21 from 37 in 2006. 2007 was an interesting year for UnitedHealth on a lot of fronts: the SEC slapped a $468 million fine on the CEO, William McGuire, who created the UnitedHealth monster, for stock option fraud. That may sound like a serious punishment until you realize that UnitedHealth gave McGuire a golden parachute retirement package worth $1.8 billion–on top of his 9-figure annual pay packages. This year, UnitedHealth was forced to pay $350 million to settle a class-action lawsuit after it was discovered that UnitedHealth used a rigged database designed to defraud American doctors and policyholders. Watch Peggy Robertson explain how UnitedHealth is preventing her from having a third child here: No wonder UnitedHealth denies coverage to rape victims and fertile mothers: UnitedHealth is the largest mass-rapist in America, why the Hell would it want to cover people for something they’re doing every minute of every working hour? And who hates fertile wombs more than serial rapists? http://www.smirkingchimp.com/thread/24561 |
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As usual, the OP leaves out very important details that make all the difference.
Like all other insurers, health insurance companies invest the premiums they collect almost immediately. So let's think hard here, kiddies-- what could be the reason :::cough Dow Jones losses:::: their profits are ::::cough AIG! CDOs!::::: 'low' as reported for this year? So instead of worrying about 'Death Panels', why isn't someone worried about what would happen if the Free Market fanatics were to get their way and have your insurance company take stupid risks with your premiums and then not pay your claims when the well runs dry? And say, "Tough luck, they deserved to go out of business" while you are forced into bankruptcy or worse. -Kerry O. |
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As usual, the OP leaves out very important details that make all the difference. Like all other insurers, health insurance companies invest the premiums they collect almost immediately. So let's think hard here, kiddies-- what could be the reason :::cough Dow Jones losses:::: their profits are ::::cough AIG! CDOs!::::: 'low' as reported for this year? So instead of worrying about 'Death Panels', why isn't someone worried about what would happen if the Free Market fanatics were to get their way and have your insurance company take stupid risks with your premiums and then not pay your claims when the well runs dry? And say, "Tough luck, they deserved to go out of business" while you are forced into bankruptcy or worse. -Kerry O.
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. obviously profits are consistent and the Dow doesn't have the impact as u state. |
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Edited by
KerryO
on
Sun 10/25/09 08:44 PM
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As usual, the OP leaves out very important details that make all the difference. Like all other insurers, health insurance companies invest the premiums they collect almost immediately. So let's think hard here, kiddies-- what could be the reason :::cough Dow Jones losses:::: their profits are ::::cough AIG! CDOs!::::: 'low' as reported for this year? So instead of worrying about 'Death Panels', why isn't someone worried about what would happen if the Free Market fanatics were to get their way and have your insurance company take stupid risks with your premiums and then not pay your claims when the well runs dry? And say, "Tough luck, they deserved to go out of business" while you are forced into bankruptcy or worse. -Kerry O.
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. obviously profits are consistent and the Dow doesn't have the impact as u state. From your very own original post: Profits barely exceeded 2 percent of revenues in the latest annual measure. 8.8 % is a LOT more money in the bank than 2 % when we're talking about billions in premiums. Simple arithmetic and the point can be made with figures from your very own posts. Obviously the health insurers aren't going broke because of all the lobbying money they're throwing around. -Kerry O. |
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Edited by
AndrewAV
on
Sun 10/25/09 09:26 PM
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As usual, the OP leaves out very important details that make all the difference. Like all other insurers, health insurance companies invest the premiums they collect almost immediately. So let's think hard here, kiddies-- what could be the reason :::cough Dow Jones losses:::: their profits are ::::cough AIG! CDOs!::::: 'low' as reported for this year? So instead of worrying about 'Death Panels', why isn't someone worried about what would happen if the Free Market fanatics were to get their way and have your insurance company take stupid risks with your premiums and then not pay your claims when the well runs dry? And say, "Tough luck, they deserved to go out of business" while you are forced into bankruptcy or worse. -Kerry O.
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. obviously profits are consistent and the Dow doesn't have the impact as u state. From your very own original post: Profits barely exceeded 2 percent of revenues in the latest annual measure. 8.8 % is a LOT more money in the bank than 2 % when we're talking about billions in premiums. Simple arithmetic and the point can be made with figures from your very own posts. Obviously the health insurers aren't going broke because of all the lobbying money they're throwing around. -Kerry O. I don't know the actual numbers so I'm not defending them, but I'm just pointing out that he said profits grew 8.8%. That means if you made a 2% profit, now you make a 2.18% profit. |
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As usual, the OP leaves out very important details that make all the difference. Like all other insurers, health insurance companies invest the premiums they collect almost immediately. So let's think hard here, kiddies-- what could be the reason :::cough Dow Jones losses:::: their profits are ::::cough AIG! CDOs!::::: 'low' as reported for this year? So instead of worrying about 'Death Panels', why isn't someone worried about what would happen if the Free Market fanatics were to get their way and have your insurance company take stupid risks with your premiums and then not pay your claims when the well runs dry? And say, "Tough luck, they deserved to go out of business" while you are forced into bankruptcy or worse. -Kerry O.
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. obviously profits are consistent and the Dow doesn't have the impact as u state. From your very own original post: Profits barely exceeded 2 percent of revenues in the latest annual measure. 8.8 % is a LOT more money in the bank than 2 % when we're talking about billions in premiums. Simple arithmetic and the point can be made with figures from your very own posts. Obviously the health insurers aren't going broke because of all the lobbying money they're throwing around. -Kerry O. I don't know the actual numbers so I'm not defending them, but I'm just pointing out that he said profits grew 8.8%. That means if you made a 2% profit, now you make a 2.18% profit. Okay, let's try this one from his original post, then: Health insurance profit margins typically run about 6 percent, give or take a point or two. Either way, the health insurance industry is playing fast and loose with the numbers, most likely in an attempt to lobby against rules that would not allow them to use tactics like recission to increase their profits. I would guess it looks better on their books to blame it on claims rather than having lost it in investments gone sour. Because really, why should the policyholders have to pay higher premiums to offset their losses in investments? This is the stuff of which reform is predicated upon. -Kerry O. |
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As usual, the OP leaves out very important details that make all the difference. Like all other insurers, health insurance companies invest the premiums they collect almost immediately. So let's think hard here, kiddies-- what could be the reason :::cough Dow Jones losses:::: their profits are ::::cough AIG! CDOs!::::: 'low' as reported for this year? So instead of worrying about 'Death Panels', why isn't someone worried about what would happen if the Free Market fanatics were to get their way and have your insurance company take stupid risks with your premiums and then not pay your claims when the well runs dry? And say, "Tough luck, they deserved to go out of business" while you are forced into bankruptcy or worse. -Kerry O.
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. obviously profits are consistent and the Dow doesn't have the impact as u state. From your very own original post: Profits barely exceeded 2 percent of revenues in the latest annual measure. 8.8 % is a LOT more money in the bank than 2 % when we're talking about billions in premiums. Simple arithmetic and the point can be made with figures from your very own posts. Obviously the health insurers aren't going broke because of all the lobbying money they're throwing around. -Kerry O. I don't know the actual numbers so I'm not defending them, but I'm just pointing out that he said profits grew 8.8%. That means if you made a 2% profit, now you make a 2.18% profit. Okay, let's try this one from his original post, then: Health insurance profit margins typically run about 6 percent, give or take a point or two. Either way, the health insurance industry is playing fast and loose with the numbers, most likely in an attempt to lobby against rules that would not allow them to use tactics like recission to increase their profits. I would guess it looks better on their books to blame it on claims rather than having lost it in investments gone sour. Because really, why should the policyholders have to pay higher premiums to offset their losses in investments? This is the stuff of which reform is predicated upon. -Kerry O. HOGWASH.....look to investors to prove that insurers are surely not reaping "excess profits". Heath insurers stock are down and generally have not participated in the 2,500 point Dow gain basically proving that profits have been consistently in line (like the article states) and for a number of years whether the Dow was at 14,000 or 6500. Therefore, your theory about their investments is obviously flawed. Our Congress has once again squandered a chance to make real reform to heathcare because all the debate has been about the public option and not how to solve problems or control costs. |
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HOGWASH.....look to investors to prove that insurers are surely not reaping "excess profits". Heath insurers stock are down and generally have not participated in the 2,500 point Dow gain basically proving that profits have been consistently in line (like the article states) and for a number of years whether the Dow was at 14,000 or 6500. Therefore, your theory about their investments is obviously flawed. I don't believe everything I read in the papers or wire services. They never give you a 'what's REALLY going on here' perspective. The business model is well known. From Wikipedia: The business model can be reduced to a simple equation: Profit = earned premium + investment income - incurred loss - underwriting expenses. Insurers make money in two ways: 1. Through underwriting, the process by which insurers select the risks to insure and decide how much in premiums to charge for accepting those risks; 2. By investing the premiums they collect from insured parties. Insurance companies also earn investment profits on “float”. “Float” or available reserve is the amount of money, at hand at any given moment, that an insurer has collected in insurance premiums but has not been paid out in claims. Insurers start investing insurance premiums as soon as they are collected and continue to earn interest on them until claims are paid out. Naturally, the “float” method is difficult to carry out in an economically depressed period. Bear markets do cause insurers to shift away from investments and to toughen up their underwriting standards. So a poor economy generally means high insurance premiums. This tendency to swing between profitable and unprofitable periods over time is commonly known as the "underwriting" or insurance cycle. Even extremely well-managed companies like Toyota lost large amounts of money last year. Many professionals like myself had to take big cuts (as much as 20% for one month last year and 10% this year), even as our health insurance premiums rose. And the return on safe investments like CD's is all but non-existent. So forgive me if I don't shed any tears for the poor health insurers who 'only' made 2-5% in '08-09. There's been a lot more pain than what they had to endure. I suspect nothing much is going to happen as far as healthcare reform and they'll use this opportunity to consolidate and become ever more of a monopoly beholden unto none. -Kerry O. |
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Edited by
Bestinshow
on
Mon 10/26/09 03:08 PM
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UnitedHealth CEO
Stephen J. Hemsley 2007 Compensation $13.2 million 2008 Compensation (Forbes) $3,241,042 Former Managing Partner and CFO of Arthur Andersen (BusinessWeek) Total Value of Unexercised Stock Options (Forbes) $744,232,068 2009 Options Exercise $127,001,281 Value of Wayzata, Minnesota Home (Hennepin County Assessor) $6,640,000 Articles: Hemsley returns $190 million in stock options acquired as a result of practices found to be fraudulent by the SEC (American Medical News) CIGNA CEO Edward Hanway Five-Year Compensation, as of April 30, 2008 (Forbes) $120.51 million Total Value of Unexercised Stock Options (Forbes) $28,881,000 Value of New Jersey Beach Home (Cape May County Assessor) $13,607,400 Articles: The family of a 17-year-old girl who died hours after CIGNA reversed a decision and said it would pay for a liver transplant plans to sue the company, their attorney said Friday. (Oakland Tribune) Hundreds of entertainment industry workers in California and New Jersey who buy health insurance as a group are being hit with a rate increase that will raise some family-plan premiums to more than $44,000 a year. (USA Today) Humana CEO Michael McCallister 2007 Compensation $10.3 million 2008 Compensation (Forbes) $1,017,308 Five-Year Compensation Total (Forbes) $15.1 million Total Value of Unexercised Stock Options (Forbes) $60,865,194 2006 Options Exercise (SECForm4) $22,294,710 Value of Park City, Utah Home (County Assessor) $6,978,380 Articles: Humana abandons senior citizens in Florida, returns after Republicans pass new Medicare law, upping HMO payments by ~ 25% (NY Times) http://sickforprofit.com/ceos/ |
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Edited by
jrbogie
on
Mon 10/26/09 03:35 PM
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Insurance seems to be a heartless industry, cant feel bad if they claim they arent making as much profit as others. Healthcare is a necessary expense for most people unlike those other industries and the whole medical field is guilty of using that fact to send people into bankruptcy while their ceos line their pockets. I will be glad to see another option on the table. sure, any ideas for that other option? and can you explain to me what is heartless about an industry that takes a huge financial risk away from you and assumes that risk themselves? are they heartless because they don't assume such a risk for free? is a six or seven percent profit heartless in your mind? sure there are abuses in any industry but the laws in this country do not make it easy to be an insurance company. does anyone here even have a clue about the insurance laws in your state? what cash reserves must a company have on hand earning nothing at all just so it will be able to meet it's obligations? do you have any idea how severely the laws protect seniors as november 15 comes each year for open enrollment for medicare suppliment policies? an agent cannot even discuss insurance over the phone with a senior without sending a letter in writing 24 hours beforehand stating that the call or visit is for the sole purpose of selling insurance. so tell me, what is heartless about the insurance industry? |
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Insurance seems to be a heartless industry, cant feel bad if they claim they arent making as much profit as others. Healthcare is a necessary expense for most people unlike those other industries and the whole medical field is guilty of using that fact to send people into bankruptcy while their ceos line their pockets. I will be glad to see another option on the table. sure, any ideas for that other option? and can you explain to me what is heartless about an industry that takes a huge financial risk away from you and assumes that risk themselves? are they heartless because they don't assume such a risk for free? is a six or seven percent profit heartless in your mind? sure there are abuses in any industry but the laws in this country do not make it easy to be an insurance company. does anyone here even have a clue about the insurance laws in your state? what cash reserves must a company have on hand earning nothing at all just so it will be able to meet it's obligations? do you have any idea how severely the laws protect seniors as november 15 comes each year for open enrollment for medicare suppliment policies? an agent cannot even discuss insurance over the phone with a senior without sending a letter in writing 24 hours beforehand stating that the call or visit is for the sole purpose of selling insurance. so tell me, what is heartless about the insurance industry? Stephen J. Hemsley 2007 Compensation $13.2 million 2008 Compensation (Forbes) $3,241,042 Former Managing Partner and CFO of Arthur Andersen (BusinessWeek) Total Value of Unexercised Stock Options (Forbes) $744,232,068 2009 Options Exercise $127,001,281 Value of Wayzata, Minnesota Home (Hennepin County Assessor) $6,640,000 Articles: Hemsley returns $190 million in stock options acquired as a result of practices found to be fraudulent by the SEC (American Medical News) |
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