Just How Profitable Are Healthcare Insurers?
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Just How Profitable Are Healthcare Insurers?
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Re: Just How Profitable Are Healthcare Insurers?
#2All this means is that the insurance companies spend most of the money they take in. They could hire x more employees and then they wouldn't be profitable at all. That doesn't mean they are tirelessly working to save you money, it just means they aren't profitable. I wouldn't read too far into this data.
Re: Just How Profitable Are Healthcare Insurers?
#3I highly recommend reading this short piece. Even though the profit margin is so small for Health Insurance Companies, “the better measurement is not profit, but return on invested capital (ROIC). ”
One more line from the article: “If I had a business that consisted of people giving me $100 bills and me paying them back $96, it would be silly to describe that as a very low-profit industry.”
Source: The Economist
Link to Article: http://www.economist.com/blogs/democracyinamerica/2010/03/he...
Re: Just How Profitable Are Healthcare Insurers?
#4Yes, and Google, Yahoo, Apple, etc don't get to decide if their customers get the heart transplant they so desperately need.
These companies need to be operating as not-for-profits, or coops. Their motivations between decisions should be driven by what's best for their members, NOT what's best for their pocketbooks. No matter whether it's a profit margin of 1% or 10% or 1000%.
Re: Just How Profitable Are Healthcare Insurers?
#5Yes, and Google, Yahoo, Apple, etc don't get to decide if their customers get the heart transplant they so desperately need. These companies need to be operating as not-for-profits, or coops. Their motivations between decisions should be driven by what's best for their members, NOT what's best for their pocketbooks. No matter whether it's a profit margin of 1% or 10% or 1000%.
That's not an argument, it's just an assertion of taste.
Re: Just How Profitable Are Healthcare Insurers?
#6Most Americans (probably 80-90%) conflate corporate greed with profits, which is the wrong way to look at the problem. Most of the asshole greed we see today is not in profit per se, but in back-scratching compensation deals for top management. Note that CEO pay is not profit. It's an expense. Most Americans either don't make or are unaware of this distinction. Managerial overcompensation is strictly worse, because at least one can invest in a company that is "profiting too much".
I'd like to see the data for other years. Recessions are bad for health insurers, because when people get fired, young and healthy people tend to drop their insurance while those who are older stay on the plan (with COBRA). So adverse selection sets in and insurance companies lose.
Re: Just How Profitable Are Healthcare Insurers?
#7Yes, and Google, Yahoo, Apple, etc don't get to decide if their customers get the heart transplant they so desperately need. These companies need to be operating as not-for-profits, or coops. Their motivations between decisions should be driven by what's best for their members, NOT what's best for their pocketbooks. No matter whether it's a profit margin of 1% or 10% or 1000%.
Most importantly, Google and Yahoo, for the most part, don't hurt anyone. They make their money in unambiguously ethical ways. US health insurers, by contrast, contribute to a 9/11 every month in preventable deaths. I don't object if Google makes a lot of money; they provide great services and they should. On the other hand, health insurers are essentially hit men-- they kill* for profit. Their pathetic numbers just indicate that they aren't very good at it.
* This may be a bit inflammatory, but it's only a mild exaggeration. In reality, their profit-making model is to externalize costs, and they don't really care whether the patient dies or (more often) the costs are dumped onto the government, or hospitals in the form of unpaid medical bills.
Re: Just How Profitable Are Healthcare Insurers?
#8Most Americans (probably 80-90%) conflate corporate greed with profits , which is the wrong way to look at the problem. Most of the asshole greed we see today is not in profit per se , but in back-scratching compensation deals for top management. Note that CEO pay is not profit. It's an expense. Most Americans either don't make or are unaware of this distinction. Managerial overcompensation is strictly worse , becaus…
Most of the asshole greed we see today is not in profit per se, but in back-scratching compensation deals for top management.
Citation, please? I'm very skeptical that pay for top execs amounts to a really significant part of corporate expenses, or that corporate profits could be increased substantially by cutting these expenses.
Re: Just How Profitable Are Healthcare Insurers?
#9Another important factor here is the amount of reserves that are held back from each $1 of premiums input into the system.
For a single payer system, the idea of reserves is non-sensical (similar to the farce of the 'social security trust fund' which makes zero sense from a macro economic perspective). I would make the point that reserves are a waste product of an insurance based system.
Re: Just How Profitable Are Healthcare Insurers?
#10Most Americans (probably 80-90%) conflate corporate greed with profits , which is the wrong way to look at the problem. Most of the asshole greed we see today is not in profit per se , but in back-scratching compensation deals for top management. Note that CEO pay is not profit. It's an expense. Most Americans either don't make or are unaware of this distinction. Managerial overcompensation is strictly worse , becaus…
A great point, and it's important to remember that this effect also maps to public choice theory in government or excessive compensation of management in the non-profit sector (though statistically I believe it is lower than in private entities), where the incentives in some ways can make it even harder to prevent abuse.