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The Immoral and Evil Insurance Companies

As the Obama administration watched their poll numbers plummet in regard to health care reform (and the public option in particular), they began trying to reshape what the debate was about.  Instead of continuing the positive tone of making sure everyone is covered and lowering costs, they went negative, attacking and vilifying the insurance companies.  They even stopped using the phrase “health care reform” and started using “health insurance reform”.  I suppose they thought they could reshape the debate from making health care affordable to, “Let’s get the evil money grubbing insurance companies!”  The President’s recent weekly address was an outright attack on the insurance companies.

At about the 4 minute mark, President Obama begins to talk about the profits of the insurance companies.  He said, “The fact is, the insurance industry is making this last ditch effort to stop reform, even as costs continue to rise and our health care dollars continue to be poured into their profits, bonuses and administrative costs.”

President Obama isn’t the only one to attack the insurance companies over their profits.  Nancy Pelosi recently said, “”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.”

Are the insurance companies really making obscene profits that are causing our premiums to rise?  According to an article from the AP the answer is no, unless you think that farm and construction machinery, Tupperware, the railroads, Hershey sweets, Molson Coors Brewing, Yum food brands and Yahoo? are all gouging us to increase their profits.  All of these companies have a higher profit margin than health insurance companies.

According to the AP,

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…

…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.

If the average profit margin of the insurance companies is currently around 2% , are their profits really the reason our health care costs are so high? Why would the President and other Democrats criticize the profits of health insurance companies when their profit margin is so small? Perhaps the answer is that all profit is evil, at least according to the President and other liberals. This would be right in stride with the march towards socialism that our country is on.  According to the Communist party USA, Capitalism is flawed because it tries to “maximize profit on the backs of the working class”.  This sounds similar to what the president has been saying about insurance profits hurting the average person.  Socialist believe profit is wrong, therefore the insurance companies should be vilified for making any profit, no matter how small.  Is there another reason, other than profit being evil, for the President to claim that a 2% profit margin is too high?

Related posts:

1. How Will Obama’s Health Care Plan Lower Costs?
2. Obama Thinks Doctors are Greedy?
3. The Real Reason Democrats Want to Pass Health Care Reform
4. The White House is Backing Away From the Public Option in Health Care Reform. Victory for Conservatives?

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