Are These “Evil For-Profit Health Insurance Companies” Really So Evil?

Your numbers are completely wrong. For instance, Apple posted net profit of $1.23 billion just last quarter. That was on revenue of $8.3 billion. Try some fact checking before you post next time.

http://www.apple.com/pr/library/2009/07/21results.html

@Rob
As I stated, multiple times, I took all these numbers from http://finance.yahoo.com. I did do simple algebra to reverse the formula to get net profit. If my arithmetic is correct then Yahoo!’s numbers must be wrong. However, I’m pretty sure if Yahoo! had it wrong, it would be in a lot of trouble with investors.

@Rob
According to the Yahoo! Finance website, their revenue and gross profit trail twelve months, so it’s not quarterly.

[...] Go here to read the rest: Are These “Evil For-Profit Health Insurance Companies” Really So … [...]

@ swordofdestiny

When I said “your numbers are completely wrong,” I was referring to the laughable calculations you made about net profit. Here, I’ll prove just how grossly inaccurate they are.

As you mentioned, Yahoo’s numbers are from the latest 12 month period. Let’s consider the last 12 months for Apple:

Q4 2008
Net profit: $1.14 billion

Q1 2009
Net profit: $1.61 billion

Q2 2009
Net profit: $1.21 billion

Q3 2009
Net profit: $1.07 billion

Source: http://www.apple.com/pr/

Therefore, the total actual 12 month net profit of Apple, Inc was $5.03 billion. Yet your claim of Apple’s net profit over the same time period: $51 million. You’re off by two orders of magnitude.

You said: “I’m pretty sure if Yahoo! had it wrong, it would be in a lot of trouble with investors.” That’s right. Which leaves the only logical conclusion: your “arithmetic” is completely wrong.

I have a typo in the previous post; Q3 2009 should say $1.23 billion. So net profit was actually $5.19 billion, not $5.03 billion.

You are right, I made a flaw in my revised formula. I cut off two zeros by dividing by 100 when I would plug in the percentages as say 4.3% as .043 in my formula. So yes, each of my net profit figures are off by two zeros. Thanks for pointing that out. Thank you for keeping me in check. I will go fix that now. So my arithmetic wasn’t completely wrong, they were just divided by 100 an extra time. The formula I was using was net profit = (profit margin (with percentages like 4.3% as .043)*revenue)/100. You can see the problem there. The formula I should have used should be net profit = profit margin (with percentages like 4.3% as .043)*revenue. I will quickly go through and recalculate all of them. Thank you again for pointing that out.

You’re welcome. Thanks for admitting your error. You might also want to revise the premise of your article, because it’s clear that health companies actually ARE making obscene net profits in the billions of dollars. Which, in my opinion, is a travesty considering how many millions of people are struggling to afford health insurance.

[...] Go here to read the rest: Are These “Evil For-Profit Health Insurance Companies” Really So … [...]

Figures are updated and even a new section added. Thanks again, Rob.

[...] Read the rest here: Are These “Evil For-Profit Health Insurance Companies” Really So … [...]

[...] rest is here:  Are These “Evil For-Profit Health Insurance Companies” Really So …SHARETHIS.addEntry({ title: “Are These “Evil For-Profit Health Insurance Companies” Really So [...]

[...] here to read the rest: Are These “Evil For-Profit Health Insurance Companies” Really So … [...]

25% net profits for pharmaceutical companies is a bit obscene, in my opinion. Of course, if you do get hold of them, you will get the answer that profits are funneled back into research, which is true, but not nearly as much as you might think.

Actually, any business where the mark up is 700% (pharmaceuticals) is going to have big profits, you can’t get around it. The only other goods I can think of with that kind of mark up is diamonds, also 700%.

To me, other than for industrial use diamonds are simply worthless, so I don’t say much, but pharmaceuticals affect everyone.

Also the problem I have is not with the company’s profit, as it truly does get put back, it is the salaries paid to the top employees, who tend to be paper pushers and business mavens, having nothing to do with the innovation or intelligence that drives the company. There are too many business majors, ‘giving us the business’, instead of the people who actually have the brains and talent getting rewarded appropriately, and then the top managers getting adequate, commensurate salaries, to the profits and innovation they produce. ( that is, the top earners should not be the CEOs, most of the time)

[...] Are These “Evil For-Profit Health Insurance Companies” Really So … [...]

@the oracle
Where are you getting this “25% net profit” for the health care insurers? I must be blind because I don’t see it.

[...] Original post: Are These “Evil For-Profit Health Insurance Companies” Really So … [...]

[...] Read the original post: Are These “Evil For-Profit Health Insurance Companies” Really So … [...]

Lets see, Merck 5.71 B from 23.26B works out to 24.55%, which I rounded up, so sue me.

Bristol-Meyers 5.442B from 20.9B works out to 26.0% and so I rounded down

Do you see it now?

@the oracle
Yes, that’s what the profit margin says. You’re repeating the data back at me. However, I misread what you wrote, I read healthcare insurers instead of pharmaceutical. I apologize. Yes, I agree that 700% markup is insane. The problem is, it’s perfectly legal for them to charge that much. It happens when there isn’t competition in the market. Sadly, there isn’t much competition in the market once you get past say, Tylenol vs Advil vs Motrin vs etc. Anyways, is it really the insurers that are being evil for-profit monsters, or is it the pharmaceutical companies. See, there will always be a need for the pharmaceutical companies. There will always be a need for pills. Demand may even increase if this legislation is passed. More people going to the doctor means more prescriptions means more pills at that insane markup passed around.

Now I see why the pharmaceutical companies applaud this bill. It’s a win-win for them. They will always get more business. I ask you again, which companies are the “evil for-profit monsters”? The insurance companies? Microsoft? Or would it be the pharmaceutical companies?

[...] Are the “evil for-profit” health insurance companies really so evil? [...]

[...] the rest of this great post here [...]

[...] the “evil for-profit” health insurance companies really so [...]

[...] This article is featured on the custom Finance Blog at Auto-Blogs.us. [...]

Health care is dealing with peoples lives. Google, MS, etc are not. 3% Admin cost for med care 30% for insurance companies where the CEOs make millions as people are refused coverage.

Insurance companies aren’t always evil.
It was United Health that made my wife’s liver transplant possible 3 years ago.
The picture in my profile was taken about 2 weeks after she had her transplant and without that lifesaving, extremely expensive procedure, she would not have been around for that picture.
I also highly doubt that under the proposed health care reform now being considered that she would have been eligible for the transplant.

who are you trying to fool? gross profits is just away to make it sound like they still have more to payout. sure they have payments to their shareholders, however rather you own one share or thousands of shares you are part of that company. this means that the so called gross profits are their net profits. health care is a right and the insurance to cover the cost of it should only include premiums high enough to cover the cost of providing the care, the cost of processing the claims, and the administration of the entire process. health insurance should have never been a for profit business.

[...] Are These “Evil For-Profit Health Insurance Companies” Really So Evil?  lockergnome.com) [...]

Who’s the audience for this article? The percentage of people who assess evil on the basis of profit alone has got to be incredibly low in a capitalist country like this. I think most people would say a company that does evil things is evil, independently of how much or how little profit the company makes.

The kidnapper who doesn’t make much money is doing evil. The child molester who makes no money is doing evil. The jerk who shakes your kid down for his lunch money is doing evil.

You’re talking about profit margins as though they bore some relationship to evil. Is that an evil distraction from the real evil? The answer to that question doesn’t depend on the profit you made or didn’t make.

@wm
Where in the world are you getting those % figures? They make no sense.
@system001
In my opinion, healthcare is not a right. Even in ancient times, people had to pay the medicine man or healer to help them (even though most of the time they didn’t have the knowledge to actually help). I am a bit overweight (working out to try to fix that) and an asthmatic. I have been on three different insurance plans throughout my life, Aetna, Blue Cross Blue Shield of Texas and United. I’ve never been denied coverage. Sure there are horror stories of our system, just like there are of the Canadian, British, French, and just about every healthcare system. Even now, you cannot be refused treatment because you cannot pay. That’s illegal. Obviously, this doesn’t count for things like, tummy tucks, etc. If you didn’t notice, the insurance companies are operating on a three to four percent profit margin. In fact the difference between their gross profit and revenue is a testament to how much coverage they pay out. That means a lot of people use the company. I pull my advice from the other day out again, stop asking the government to wipe your ass and learn to do it for yourself.

@Chip Black
The title was something to make the liberals go “Ohhh someone else who hates the insurance companies.” I’ve read in other articles who call them “evil for-profit health insurance companies” whose only goal is to “profit from our misery.” If you haven’t noticed, the current administration has been demonizing most large businesses and people of the wealthier class even more than Apple fanboys have been demonizing Microsoft.

@bob3160
Thank you for your input. We had a similar experience with United. While my mother was still with BCBS she developed both breast cancer and skin cancer. BCBS paid for all the treatments, but she also has to take this pill every month. It was rather expensive under BCBS, I think it was around $100-$150 for one pill. However, under United, the max you pay for any prescription is $50. I don’t know about Aetna now because I haven’t asked her about it. I’d hate to think what would happen if my mother developed another cancer under this proposed plan. What country can we turn to for cancer treatment? This country for many years has been where people go to get cancer treatment. We have the highest cancer survival rate in the world! You wont hear that from the MSM though.

Hi Folks,
@bob360 As I understand it I think your wife would still have gotten the transplant under the proposed plans.

I’m a bit mistified about the healthcare industry’s attitude to this.
The UK system includes for profit organisations in addition to non profit. Also you also have the option to buy health insurance to ‘top up’ your healthcare. Surely the industry will end up providing more services to more people and end up with greater revenue overall?
Isn’t this a win win? For the record I believe basic healthcare is a moral responsibility in a modern society. If you’re in need of lifesaving surgery I think the state should step in to help.
Maybe not in other situations but certainly in essential cases.

@Antonio
While the UK system does allow profit organizations, consider this, if you have cancer in the UK, you’re better off going to the U.S. for treatment. Strange that they would want to come from such a “great system” to a “broken one” for cancer treatment.

That would wake me up real quick, if i had to pay $100 to $150 for
one lousy chemical pill. I would start googling like mad to find my
own cure, ask for (my mamie) mother nature.
There has been a cure for cancer since the 1930’s. You can now
find it on the internet, if you take the effort.
That is probably HOW we got the highest cancer survival rate in the world, (as you mention) (without any proof, i might add)
.
So, therefore; here is my statement: We have the highest cancer rate in the world.
.
Why, how? start googling……..

What do I think? I think you misplaced the quotation marks. It should read: evil “for-profit” not “evil for-profit.” With the latter is reads like evil is the profit not that the insurance companies are evil because they make a profit. ;-)

C a n o l a oil is T O X I C
======================
Can-ola = “Canadian oil”
.
Canola
oil acts as a slow poisoning agent,

“Canola” oil is showing up in the
ingredients list of more and more
products
“Alarming things are happening to our
foods these days,
if we’re not aware
and vigilant enough about such matters to
‘vote with our walet, we deserve the poor health and
medical complications we get as a result….
reading ingredients, you’ve probably
noticed nasty poisons like “Canola” oil,
MSG, Aspartame, soy ,aluminum creeping into
Products, even health food.
.
The
impact on our health from the Canola
scam is 1000 times nastier than from the
soy fraud.
An
unhealthy public is a docile public of
easily herded sheep.
.
Canola oil comes from the rape seed,
which is part of the mustard family of
plants. Rape is THE MOST TOXIC of
all food-oil plants. Like soy, rape is a
weed. Insects will not eat it; it is deadly
poisonous! THE OIL FROM THE
RAPE SEED IS A THOUSAND TIMES
MORE TOXIC THAN SOY OIL!
Canola is a semi-drying oil that is used
as a lubricant, fuel, soap, and synthetic
rubber base, and as an illuminant for the
slick color pages you see in magazines. It
is an industrial oil and does NOT belong
in the body!
Loss of vision is a known
characteristic side-effect of rape oil, which
antagonizes the central and peripheral
nervous systems—
Rape (Canola) oil causes emphysema,
respiratory distress, anemia, constipation,
irritability, and blindness in animals—and
humans.
Recently there has been a
tremendous increase in disorders like
systemic lupus, multiple sclerosis,
cerebral palsy, pulmonary hypertension,
neuropathy, and “myelinoma”,
Soy and Canola oils are players in the
outbreak of these disease conditions
Canola oil is also high in glycosides that cause serious
problems by blocking enzyme function and depriving us of our
life force
Canola Oil, HIV, And AIDS
Soy and Canola oil glycosides also depress the immune
system. They cause the white-blood-cell defense system—the Tcells—
to go into a stupor.
.
Action: (1) Word to mouth;
tell your neighbors, friends, family.
Yes, you are your brother’s keeper !!!
.
(2) The pen is mightier than the sword.
Use american ingenuity, get creative, inventive to warn others.
Keep your black felt pen with you at all times.
(write ” TOXIC ” on Canola bottles in stores, save human lives.)
show kids the power of graffiti; like…where’s the birth-certificate?
.

There are 6 billion of us and only 300 of NWO elites, who enrolled
most of our government as tools for them.
.
Your power comes alive when you overcome paralizing fear & take calculated action.
.
They are planning for over 200 years now to enlave us, suck every last drop of blood from us…. yet…
.
They are so close …&… yet, so very far from it.
You know why?
We do have a creator. And the creator has now listened. There
will be no prison planet earth.

[...] This article is featured on the custom Yahoo Blog at Auto-Blogs.us. [...]

Health insurance companies aren’t evil. They just have no role in health insurance. They provide absolutely no value-added to the process and divert money from patient healthcare to their own business expenses and bottom line. I’m not saying they should be non-profit. They shouldn’t even exist.

[...] This article is featured on the custom Aetna Blog at Auto-Blogs.us. [...]

[...] Are the “evil for-profit” health insurance companies really so evil? [...]

@concertpianist
I would love to see your source about the canola oil. As far as I’ve read, it’s perfectly safe. It has been genetically engineered to have less eruric acid. This is a Wikipedia snippit:
“Health benefits

Compound Family % of total
Oleic acid
ω-9
61%[16]
Linoleic acid
ω-6
21%[16]
Alpha-linolenic acid
ω-3
11%[16] 9%[17]
Saturated fatty acids
7%[16]
Palmitic acid
4%[17]
Stearic acid
2%[17]
Trans fat
4%[17]
Canola oil has been claimed to promote good health due to its very low saturated fat and high monounsaturated fat content, and beneficial omega-3 fatty acid profile. The Canola Council of Canada states that it is completely safe and is the “healthiest” of all commonly used cooking oils.[18] It has well established heart health benefits[19] and is recognized by many health professional organizations including the American Dietetics Association, and American Heart Association, among others.[20][21][22][23] Canola oil has been authorized a qualified health claim from the US Food and Drug Administration [24] based on its ability to reduce the risk of coronary heart disease due to its unsaturated fat content.”

@concertpianist
Take a read of http://www.snopes.com/medical/toxins/canola.asp as well.

Hi swordofdestiny,
ja, i expected some adverse reaction here. I will always SMILE at it. You are just so darling, love your picture. Also love your new song you posted last year. WOW, got my attention, just to creative lovely sounds, keep it up, babe. We are tired of the commercial mind numbing garb, that’s out there. Well, on tv, i can handle the syfy sound pretty well, all synthesizers & lots of
symphonic sounds, easy to wallow to.
That snopes site os 100% right on. I can not figuer out who wrote it, but i adore her/him. Then of course, some paid idiot,
elite-tool, has to sound off & praise the f…FDA, hahahahahahaha
.
I wonder, when will you realize, that Wikipedia is totally under
illuminati control. I found proof of it personally. Its always such a
shock.
.
To each its own. I don’t care, what anyone believes, everyone is
responsible for themselves. Those dis-informant agents are all
over the internet, because the internet is the greatest danger to
NWO. So, they use our tax$ to keep us confused. Devide & con-
quer! I am smiling at that wherever i see it, and i see it all over.
.

swordofdestiny,
one more thing i like to add. I remember well, in school, how they
drummed it into our brain to always see both sides of everything.
It proved only to be intelligent, if we always would, could argue real intense, find opposites, disassemble everything to the core,
till nothing is left in fact finally. Great praise was given to such
intellectuals, who could tear everything apart. The mind was tops, screw the heart, its not real, we must ignore it.
Well, now…
What do you think? What do you feel?
Which one do you prefer?
OK, start thinking with your heart. You can’t go wrong, ever.
Cause we are way to easy mind-controlled, but our heart NEVER lies.
So, take a sip of Canola oil into your mouth, hold it there for 20
minutes, spit it out then (it is full of toxins by that time) anyway.
.
Then,
take a sip of some good olive oil, hold it that long, too, then spit it
out. FEEL the difference…… hahahahahah
OK,
just for fun,
all the arguing will melt away…..
hugs.

ward29800
I agree with you totally. ALL insurance companies are the indoc-
trination & invention of some aliens, who want to control us, en-
slave us & take over our planet, cause they screwd up their piece
of realty, planet.
That is exactly what insurance companies are all about, suck us
dry financially, lay down rules beyond endurance, try to run our business & very life. Anyone with just a little awareness can so
clearly spot that.
Take away self responsibility, make others irresponsible, too.
Look what happened with Katrina. They file bankrupcy & bailouts.
(Mother Nature can’t be matched anyway)
.
Sure, a few will pay out once in a while, in order to keep the flug,
scam going.
I’m telling you…. aliens, very vicious ones, hahahaha

A nice analysis of a demonized situation. To those that think there shouldn’t be heath care insurance – what risks are you prepared to assume? The insurance companies pool people together so that the $400k care patient is paid for by those that need zero care. They do provide a needed service. Their profits are needed to provide reserves against their poor bets. By law in most states they must pay out 80-85% of premiums on care.

The so-called public plan can be non-profit because the taxpayer always will assume the risks of too low premiums. The reserves come from you in taxes just like for Freddy and Fannie. There is no free lunch. A public plan modeled on Medicare will result in an inability to find willing doctors to provide care.

Single payer systems place all risks on the taxpayer. That’s why the UK NHS is the second largest employer in the world; it’s also why care must be rationed and waits are normal. But you eventually get serviced, if you don’t die beforehand and few die from lack of care. Just another risk. One lovely feature of single payer is the virtual inability to sue for poor care. I’m sure that will please the tort lawyers here.

The debate on health care is complex and barraged by false claims from all sides. What remains certain is that your overall heath is an individual responsibility, you have no ‘right’ to heath beyond what your genetics provide. Way too many people indulge in risky and unhealthy behavior. Those folk fortunate enough to have some heath insurance are certainly lucky folk indeed. Those without such a safety net must be doubly cautious. The current debate is what to do for those that may or will not be cautious about their heath?

if you want profit data from yahoo, type in the company to get stock quotes and when it comes up with company info, on the left side move down to ‘financials’ and chose income statements. this will give you the last three quarters revenue, gross profit, net profit and a number components
no need for all the useless math that you were doing to get a readily published answer

I like your site and appreciate your cool demeanor.
It’s a shame that people like “Rob” are so crass. You are trying to engage people in a valuable discussion.

Thanks for your input into this debate – you’ve added another voice of reason.

1. I don’t understand why insurance companies have such a huge divergence between their gross profit and their net profit, while other corporations have a much smaller divergence. Gross profit for the top pharma companies runs a bit over 30%, while net profit is around 20-25%. Gross profit for the insurance companies you list is from 8% to 50%, while net profit is 2-4%. How do you explain this difference?

2. More importantly, you need to consider something about the arguments that opponents of private health insurance make. Whatever those extra costs are that bring gross profit down to net profit, single-payer government insurers don’t need to pay them. It may be true that private insurers, after making their gross profits, then need to deal with all sorts of costs, like taxes and…(actually I’m a bit unclear on what the other costs are). But a single-payer government insurer like Medicare doesn’t need to pay taxes. And whatever those other costs are, I’m pretty sure a single-payer public insurer doesn’t need to pay them, either. The argument against private health insurance is not that private insurers’ shareholders are all making out like bandits and we’re jealous. The argument is simply that single-payer insurance costs less.

Put it this way: In 2008, Aetna had revenue of $32.67 billion and gross profit of $8.23 billion. So they paid out $24.44 billion in reimbursement of medical expenses, salaries, office rent, and other operating expenses. If they were a public agency, how much revenue would they need to cover $24.44 billion in expenses? Well, $24.44 billion. But Aetna needed $32.67 billion in revenue to do that — whatever those other after-profit expenses may have been is irrelevant.

The reason capitalism is superior, in general, to a state-run non-market economy, is that the profit incentive drives greater efficiency and innovation. The problem is that in the insurance sector, the profit motive does not necessarily create anything of value. Insurance is simply an actuarial scheme; it needs to make a good assessment of what costs are likely to be, and then charge enough in premiums to cover those costs. That’s not a very exciting business, and there’s not much need for innovation. In fact, to the extent that the profit motive incentivizes insurance companies to “innovate” new techniques for collecting more in premiums and covering less in medical expenses, the profit motive actually destroys value in the insurance system. This is very different from the health *care* industry, where the profit motive does generally incentivize better care. And that is why so many people in the US think we should keep the health care industry private, but get rid of private health insurance. Does that make sense?

Hooray — numbers! I see a lot that have been run through more mills than yours or pulled from what a friend calls “the rectal database.”

I think what bothers me about health care companies is not so much that they make a profit, exactly, but that they have publicly traded shares which require that they shove that profit margin higher. When you get right down to it, that profit margin represents $233,807,000, to pick the lowest number, of money that was entrusted to the corporation for purposes of performing medical procedures, but which was then NOT used for performing medical procedures. $234 million could pay for a lot of procedures, especially if those procedures are early diagnostics and preventive care, those things that keep medical costs down overall. Somehow that seems a greater violation of consumer trust than not using money to invent a slightly faster microchip or mark a price a little lower. Where to rank all that pharmaceutical money that isn’t going into research is a little more ambiguous. “The bottom line matters more when it’s your bottom on the line,” and all that.

Well, okay, that and that my last HMO had arbitrary parts of the body which weren’t considered parts at all: eyes, teeth, and sometimes female reproductive organs depending on the problem. If you have any of the above, too bad. You may as well get rid of them. They aren’t _really_ part of the whole. You’re just deluding yourself. No problem in any of those can possibly have an effect on the rest of the system.

Whether health care is a right of all individuals or not overlooks something fundamental, namely, that some ill health is contagious. The better our health care system, the more proof we have against epidemics and pandemics, because our population can get diagnosed and treated before spreading the disease as far. This is national security we’re talking here, not just the comfort and health of this or that individual. Somehow our “me, me, me!” culture has missed that. A fallback system to keep sick homeless people from being tossed back into the street, there to infect everyone who walks past, might not be such a dreadfully bad idea, no? In theory, they have to be admitted to the emergency room. In practice, not so much.

The spinoff of that, of course, is the great howl over the prospect that illegal immigrants should be covered in any way. Swine flu (for instance) doesn’t check for green cards, birth certificates, and drivers’ licences. It just spreads. The less it’s treated in individuals, the more it spreads through the society. We should have learned that in the 1300s with plague –the flea that hops off the leg of the least of us may next bite the highest of us, and so on — but we are bad historians.

@ Matt Steinglass: ” In fact, to the extent that the profit motive incentivizes insurance companies to “innovate” new techniques for collecting more in premiums and covering less in medical expenses, the profit motive actually destroys value in the insurance system.” ***applause***

If they make one single penny of profit, they are, in fact, evil.

Insurance is in it for the profits and profits are what pushes them to deny people. If i pay my premiums but don’t get what i paid for because they want to make a profit, that’s not right and it’s got to change.

Claims denial rates by leading California insurers, first six months of 2009:

PacifiCare — 39.6 percent
Cigna — 32.7 percent
HealthNet — 30 percent
Kaiser Permanente — 28.3 percent
Blue Cross — 27.9 percent
Aetna — 6.4 percent

http://www.calnurses.org/media-center/press-releases/2009/september/california-s-real-death-panels-insurers-deny-21-of-claims.html

You are on the right track but still with a faulty analysis.

Profit margins mean little. It is as if you judged income without the hours worked and how steady the job was. If a school teacher makes $50k is it too little, too much, or about right? It would depend on how many hours were worked, how stable the job was, what retirement and other benefits where offered.

The same applies here. The three things you want to look at are return on assets, how well the company used the resources it had, return on equity, a similar measure, but on which reflects the return on the equity portion of the assets and reflects the stock price. It is more equivalent to what on owner, in this case a stockholder, of the company would earn. And finally, how stable are the earnings. For most, but not all, insurance companies they are pretty stable.

The analysis will show all companies fit on the same graph of return on equity vs. risk. Return on assets is a measure how well they are doing for society.

Healthcare is as much of a basic human right as the right to pursue happiness or that of free speech and religion.

Do you take issue with any of the “rights” promised us by the Bill of Rights? You know, back in the day, not only did you have to pay the medicine man but you could get killed for speaking your mind or worshiping another deity. Does that mean the Constitution is wrong, because is wasn’t done that way in antiquity? Of course not. Why then should we make healthcare pass the same test?

Healthcare is as much of a basic human right as the right to pursue happiness or that of free speech and religion.

Do you take issue with any of the “rights” promised us by the Bill of Rights? You know, back in the day, not only did you have to pay the medicine man but you could get killed for speaking your mind or worshiping another deity. Does that mean the Constitution is wrong, because it wasn’t done that way in antiquity? Of course not. Why then should we make healthcare pass the same test?

Every enterprise must produce profit but not health insureres
Which meens we dont need them.

The major point you are missing, sir, is that these profits are made off the suffering of people. The more claims they reject, the more profitable they are. Last I checked, Microsoft wasn’t making profits off people’s misery, unless you count Vista. :-)

For openers, anyone who says “anyways” is an uneducated dork.

Past that, anyone who considers care of sick people a profit-making possibility is an amoral superficial fool and should consider the karma of such selfishness.

Great article, I just linked it in my most recent blog about insurers and the myth of whirlwind profits. Thanks for backing up what manyu of us know.

so… who is it that decides what is an obscene profit? let us not forget those 401(k) investments in insurance companies either.

Exxon Mobil Corp. (XOM):

* Revenue: $346.88 Billion
* Gross Profit: $188.55 Billion
* Profit Margin: 8.98%
* Net Profit: $311,498,240,000

Im curious as to how Net profit can be $311 billion when gross profit is only $188 billion. In fact that’s impossible.

You are quite correct sir. Like most humans do, I have my faults and I had an extra zero in my numbers for Exxon. Their actual net profit via the formula would be $31billion, not $311 billion. This is also why I’m not an accountant. I’ll update the article with the correction Monday afternoon.

The reason there is 700% so called markup in pharma is to cover huge R&D expenses, partly due to gov’t regulation for approval.
If Healthcare is a basic right, isn’t food, shelter and clothing. should I just stop working and let the gov’t provide my basic rights? This rights thing is not about “things” but ideas. My right to freely worship takes nothing from my neighbor. My right to free speech takes nothing from my neighbor.
A “right” to healthcare ultimately means a right to take it by force from my neighbor, (or my doctor, pharma company, etc). You don’t understand what the constitutional rights are in the first place.

Note this, if the Ins. companies made 0 profit, would you be happy? It would only reduce the cost by 4% (the profit.) And some people will still not get all the care they might want.

Why is it that we think big companies are evil, but big government is inherently good? The Founders feared government much more than business. Which is why the constitution is an enumerated powers document.

doug, you cannot compare healthcare to food, shelter and clothing. Ins companies can still make a profit with universal healthcare, not just as much. They make a profit now at the expense of denying health insurance to non-profitable people. How would you feel if you had a disease and are denied coverage? Tell me this, why is the U.S the only industrialized country without Universal health care?

I agree with Doug -Healthcare is not a right. The fact that other goernments see it this way does not make it right thinking.

The question is what percent of premium dollars are actually paid out in benefits. Who cares how much is left over as “profit” after everyone is paid off? Heck, after the bank robbers divy up the look, there’s 0% profit.

Have you read the Bill of Rights, Joesph? You should read it again. It’s not a list of rights we have, but a list of restrictions on how the Government can impose itself on us! It is a bill stating our right to be free of Government burden and control. It was written to get the the states that were hesitant about having a central government to come along – a promise it wouldn’t get out of control. They wrote the Bill of Rights and also included in the Constitution that the central government has no rights to do anything, unless it is given that power in the Constitution. I’m not sure where the Administration thinks it has the authority for national healthcare…Commerce Clause maybe. This Administration is exactly what the founders most feared, as it would drag us back toward the European model which we broke away from to form a system that has been so successful that it made us as successful as we are as a country.

Denial of Claims – people make rediculous claims daily. Their greed and fraud is amazing, and insurers will always be in a position to deny claims, whethers its a private insurance company or the government. We are coutry of laws, and insurance policies are contracts. If an insurance company denies a claim, it has to be in keeping with the contract, or they will be sued. Why do you think ambulance chaser lawyers exist (in part)? They serve a function too here in bringing bad actors to the courts, who will dole out justice.

Profit Margins – If I have $10,000 and want to invest it, where should I go? If I put it in the bank, it’s perfectly safe and I might get 4% profit or so. If I give it to my brother-in-law for his lawnmowing startup company, I might own half the company and stand to make 500% profit. Unfortunately, he very well might fail and I lose everthing. For me, I might buy pharma stock (until the latest crush-the-worlds-supreme-pharma-industry movement) and hope to get some rewards form their innovation and profitability. These companies’ profitability has, by the way, provided money to hundreds of thousands of people who own stock through 401Ks. Speaking of, if you are making 401k elections, do you pick profitable companies or low-profit-margin companies?

Business Risk – Here is what we say to people: You want to start a business (insurance company, pharma maker, lawn mover)? Go right ahead. It will take a lot of investment money to hire people, rent facilities, advertize, etc. If you fail and go out of business, which the vast majority do, then oh well, better luck next time. But if you manage to make a profit, we will take about 50% of it in taxes to run Government programs, welfare, medicare, etc. Have you started a company? If not, why not? Don’t like the deal? What if your President was making it clear that the “profit-motive” is bad? Maybe we can all hang around wringing our hands hoping someone will take the bait and create a company, so we can all go work there. Our business owners and leaders should be our heroes, not villified.

Insurance Company Value – I think they got sloppy, but they do add value. The profit motive drives them to reduce their overhead burden and continually operate more and more efficiently to maximize profits and out compete the other companies. If they simply screw their customers, their customers go elsewhere. They find efficiencies in automated system, new management strategies, claim processing speed, etc. And now we think that Government beurocrats who can’t be fired and have no interest in profitability (because their money just gets handed to them from taxes) will drive innovation and improvement as well? Really? The Government is utterly inept, efficiency wise, at most everything, except maybe the military.

Pharma value – So you want to start a pharmaceutical company because you see that there are great profits to be had? Great! Go ahead. It’s risky, but if you make it, we will take from you at least 50% of your profits to feed Government programs in the end anyway. To entice you to spend the money on research to create new drugs, we’ll offer a carrot. You can charge whatever you want for those drugs, but only for 12 years. At the end of that time, you have no rights to them, they go generic, and we all get to buy them for next to nothing. SO, the taxpayers don’t have to pay for drug R&D (as if the Government could actually invent something anyway), we get the product of your efforts after 12 years, and if we just have to have the latest shiny new pill before it goes generic then it will cost a lot. It’s genious. It’s why nearly all drugs are invented here. Now, we don’t like the profits they’ve been able to make (even though we take most of it from them), so let’s definitely impose cost controls to lower brand drugs in those first 12 years to disinentivise the investors from developing new drugs, or to only try to develop a few drugs with the most profit potential. This is a great plan. Screw them for their profit motive.

Pharma Competition – There are some drugs for which there are no real competition (the “blockbusters”) for those first 12 years until the drug technology becomes free to any company and gets made in China. Those drugs represent real breakthroughs, they are rare for pharma companies, they are expensive for us to buy (for 12 years), and they are hugely profitable for the inventor/manufacturer. Most drugs, however, represent a growth in science and there are several companies making competing drugs, so prices can’t get too out of control (because docs still prescribe the less expensive effective treatment). Note that all of our generic drugs and even our over the counter drugs were invented by some very smart people, who profited big time off them for 12 years…and now we have them for $6 a pop. I can’t imagine a more elogant system.

Universal Healthcare – If we as a people believe that we should take enough money from the producers in our economy to give healthcare to the receivers, then why don’t we just expand Medicare? I don’t claim to have a solution to this, provided this is what you people really want to do. I know that the top 5% of wage earners already pay for more than half of the taxes, so I suppose it’s easy to think of things to spend their money on. Or BETTER, let’s tax the people who create jobs (business owners, execs, etc.) a bit more, then borrow tons of money from China, so we can expand healthcare, buy old cars back from people, expand Government spending, and pretent that we didn’t just incur more than $400,000 in interest on our national debt as you read this.

Cheers

Yes Rob, from the standpoint of percentage of profit it may appear that these companies are not as profitable as some other industries. But then let’s ask ourselves a few questions like what part of the business cycle do they occupy? Mature. right? Is google or apple a mature business? No they are still in the growth phase so naturally any business that is still growing, since demand is rising, will garner more profitability. How innovative have insurance companies been? Do they offer better efficiencies in the marketplace or do they simply manage claims payouts. Do they cherrypick mostly healthy clients? Don’t they operate more like a commodity, a mature business, where the profit is made in volume not on a per unit basis. Let’s look at the dollar amounts of their profits? Moreover, let’s examine how they might become even more profitable if they would adopt a preventative rather than emergency based medical model. With preventative even though premiums would dramatically decrease, profits would rise on a percentage basis. However, on a dollar volume basis these profits would also drop dramatically. There would be less serious illness, lower health care costs, higher percentage profits, but lower profits in real dollars. The misinformation that is being disseminated in terms of healthcare is designed to hoodwink the public into believing that our current emergency healthcare model is optimal, & insurers profits are reasonable. This is what happens when attorneys are allowed to operate businesses. Almost no innovation occurs, they highjack the law to carve out their territory, they leverage finanicial resources to merge & aquire assets, solidify their strength & monopolistic aims, & then disseminate false premises like our percentage profits are reasonable. Certainly the medical community itself has taken steps to discredit preventative care due to their vested interest in the current emergency model & the profits they secure from it. Overall, the true picture becomes obscured, hopelessly mired in abstract side issues. Ask yourself – why haven’t healthcare insurers or the medical communioty taken aim at the food industry that is serving up high fat, high salt, & high sugar content foods that make us more unhealthy. Wouldn’t it be in their best interest to lower the incidence of diabetes, high cholesterol, heart attacks, etc. On the other hand perhaps, given their current positioning, they might just prefer to claim increased premiums due to increased needs for care? Think about it.

Two major points:

1) I Read one reply that touched on the fact that there is something wrong with the difference between the Gross and the Net profit from the Insurance Company figures. So, the thing we need to understand is that these figures are what is left after they hide what they did with the gross profit. If they gave a $2M bonus to the CEO that is money that is gone for the rest of us. They can hide gross profit in many other “Evil” ways to let’s not start getting warm and fuzzy about these shatks because they showed you a 4% profit margin. Poor little insurance machine.

2) The broken part of our system has nothing to do with profit margin. The broken part is about how our nation is able to compete in a global economy. We are out and out straggling ourselves with internal greed. I’m not going to defend either political parties because they are both so far gone, but the reps come straight out and say that we need to reduce taxes for the rich and the big corporations because when they do well it all trickles down to the rest of us. I agree if the playing field was fair for eveyone, but they go too far with the unfair advantages thy give some industries, the no bid contracts and the special health insurance rates for big companies. These unfair advantages strangle our Gross National Product when the money is filtered into less than 1% of our population and it is no longer curculated internally. These rich people take their money out of the country, hide it in Swiss accounts and buy property outside the country. Are we nuts ? On the other hand if we let the dems regulate everything we are doomed to have half the country employed by the government, holding jobs where they work as little as possible, just waiting to retire with a larger than necessary retirement package. Sort of like how the UW has straggled the profit out of GM. Let’s face it, we are way too greedy, and way too stupid to have enough common sense to manage ourselves. Unions demand that we pay an unskilled bolt tightener $35/ hr with full health benefits and a retirement plan when a college educated graduate can’t find a job and if he/she does they would pay 60% of the health care premium and have to create a retirement package on their own. We are so upside down we cannot even think that we are going to remain the world power in the future.

The only relevant facts are that there are profits at all for insurance companies. Insurance companies provide no service. They soak up money and act as middlemen. They are not needed, and the BILLIONS of dollars that they collect in Gross profit are billions that could have gone towards ACTUAL MEDICAL TREATMENTS. It is completely irrelevant that the billions in gross profit are taxed. It’s the pre-tax profits that is money lost that could have provided BILLIONS in dollars of medical treatments.

The 3 examples you provided account for over 19,000,000,000 US DOLLARS that should have gone to provide medical treatments, and instead went to insurance companies… for what? for acting as middlemen? 19 billion dollars would have been a shit load of medical treatments.

you sir, should be ashamed of yourself.

the real issue it not how much money do insurance companies make, but rather, would the healthcare system be better if they did not exist? would health care for all be improved, more affordable, and more accessible without the insurance industry?

Don’t forget that those “evil” profits are divided as dividends to shareholders, like your 401k or other mutual fund investments. They don’t keep those profits in the bank. Without dividends, they would have few shareholders.

For profit companies pay dividends. Non profit companies also have shareholders and the “surplus” is paid in dividends. And even the mutual companies, like Mutual of Omaha and New York Mutual Life Insurance pay dividends to the policy holders , each of who are a part owner.

So who benefits from the “evil” profits? Most of us do.

Whew! A lot of long windy answers… and plenty of really fuzzy math in long supply.

Your claim for Exxon’s profits of $311B should probably leave you embarrassed, not only because you show net profit at $123B more than gross (just not possible,) but because this syntactically impossible claim remained even after looking at and correcting your figures several times… How many tries does it take to get basic math right?

But even more, is it really that tough to figure out that the NET INCOME is going to be listed on the INCOME Statement and just get the actual number instead of calculate it?

Honestly sorry to be such an @ss to you, but how can you make a sound argument when your whole basis is unconfirmed and incorrect..

Moving on to the core question, YES! they really are unreasonable costs that these companies add to healthcare and that’s because unlike every other company you listed, they DON”T provide a valuable good or service!!! Forget their net income, every dollar of gross profit, which is then wasted on marketing, insane exec. compensation and (biggest in the bunch) billion$ of dollars in contributions (read:”bribes”) to every politician who will take it, to make sure they can keep their undeserved place atop the heap!

Yes, profits at other medical industry businesses may also be excessive, usually due to a government-assisted lack of competition, but at least they add significant value to health care, “insurance” does not! It is merely a transaction cost in a poorly run risk pooling scheme.

A hospital is analogous to a Wal-mart, they bring a large number of the goods/service needed together in one place, making it convenient to get a diversity of care done in a short span from one location.

A Pharmaceutical company has a similar role to Microsoft as it bears great risk and expense over time to develop unique products which the marketplace wouldn’t otherwise have that bring irreplaceable value to its beneficiaries.

There is no real-world analogue for health insurance companies, because the free market wouldn’t tolerate such an egregious cost addition in any other market.

Imagine this, you’re worried and uncertain about how much your groceries are going to cost, so much so that your employer decides to provide you with a grocery insurance policy as a fringe benefit to attract you as a worker.

Now when you go to the grocery store, you don’t pay with your money (or you pay a trivial fraction of the real cost,) you just swipe your grocery “insurance” card and it all seems free. You’d grab anything off the shelf that interest you in the slightest cost be damned, cause “I’m not paying for it!” \

But also, grocery insurance isn’t attempting real cost controls, because in the end, it just passes the bills on in never-ending increased premiums. This scenario demonstrates the unique and ridiculous structure that exists in this country. Cost control is left primarily to the seller in this free market!

But cost control issues aside, despite not providing any significant measure of care to improve the health of it’s customers, the insurer will nearly 25% to cost of providing that care, because for every $81 the industry pays out to actual care providers, it keeps $19 to pay for its burgeoning waste…
(For comparison, the US Govt. run Medicare program spends only 3% of its budget on items other than actual care vs private industry’s 19%… Oh yeah, for-profits are always more efficient…)

Hey, I’ve got a new post title for you…
“There’s a 25% tax on all health care services in this country & it’s called health insurance!”

@Aaron The $311B thing has already been pointed out, I added an extra zero by mistake and I haven’t had the time to edit my post. College this semester has been a bit more involved than I had expected. I barely have the time to write this reply to you in between studying (practicing, I am a music major after all) for finals and working on my composition project for Theory this semester. Hopefully, this time next week, I should have time to debate you.

wal-mart gives low prices for nessecities that we need. Health insurance companies, that could very well save our lifes, are not looking out for us. Health insurance is important to have but tons of americans dont have any! we are not going after the health insurers because they make the most money. We are going after them because Americans need their help and they are just being greedy. Mac, and whatever else on here, is not something we need. we dont need to have a computer, or need to have softwares or whatever. those are wants. what we need is health insurance.
p.s. wal-mart is the best ever, rich or poor its the place to be to get things you and either need or want.

Everyone is missing the point… it’s not how much profit, it’s the fact that it’s possible to make a profit on people who are sick and dying.

Life and death decisions/policies are made regarding a person’s health care based on profit. There is no other country in the world that does this.

Health Care is not an industry. It’s about public safety. Our police departments and fire departments are not for profit, and neither should are hospitals and health clinics.

If a Health Care company made a bigger profit one year over the next, it meant that they either denied more treatments or raised the costs and provided less services.

It’s disgusting.

Amount of actual health care provided by health insurers: Zero. Health insurance is NOT healthcare, health insurers provide no real health care at all. If you can eliminate the middle man, why not do it?

In a country which is so concerned with doing the right thing, how much overhead/profit in health care is too much/immoral? If profit is created by allowing someone to remain sick or die, is that okay?

And when we talk about profits, how much salary/bonus should a CEO of one of these companies take home, at the expense of a sick/dying public? And I’ll guess that all the money spent on lobbying politicians is spent before the net profit is calculated.

Primary health care should be a not-for-profit business. I could care less who runs it, the govt or a private foundation. But all expenses and salaries should be made public and we should know where our dollars are going, and be comfortable with it.

Doug you are right on point.

The rest of you are right also. We don’t “need” the profit oriented health insurance companies. The fact is, some of us “want” them. We want them so we don’t have to keep thousands of dollars sitting around for an emergency. Like buying a car or a house, we would rather make monthly payments and let the insuarnce companies take the downside risk.

Homeowners insurance serves the same purpose. Take on the risk and when your house burns, pay to rebuild it out of your pocket or make monthly insurance claims and spread the risk over time and over other insurees.

Yes, the right to health care is given to all of us here in the USA. You have right to health care without being denied, based on race, religion, sex, age etc. However, there is no right to health insurance. You have the “right” to health care by paying for it out of your pocket when you get sick. You do not have the right to force me to help pay for your health care because you can’t afford it.

I hear about “evil” companies making profits from health care. Based on that mind set, shouldn’t all doctors be volunteers? Doctors go to school for a long time and study very hard for the salaries the earn. They make very good incomes compared to the rest of us. The desire to help people and the knowledge that they will be well compensated is exactly what motivates the best and the brightest people to become doctors.

I

If the amount of profits is the problem, let’s just allow true across state competition and allow more insurance compaines into the market. That will spread the profits around. If nothing else changes, the percentages will be the same but profit values will be easier to swollow for some of you.

I was researching comparatives on Health Insurer profits vs Phara profits and I found this very helpful. However, I fear that you folks like most other people are missing the point. The real question should be, why are more and more people getting sicker and sicker at younger and younger ages? That’s the real reason why “Health Care Costs” (or should we call it Sick Care Costs) are increasing at such a rapid rate. What you need to check out is why USA ranks 72nd in the world in “wellness” according to WHO. It’s because other countries “supplement”! While our politicians and the power of big Parma doesn’t let new biotech companies/researches tell the truth about what else is availabe to help people overcome illness WITHOUT use of pharmacueticals! That’s what’s making Americans sick! Bernie