As the reform debate continues in Washington, recent reports have emerged showing that the health insurance industry is not as profitable as many would assume. Calvin Woodward of My Way News has posted this interesting article looking at some of the claims about health care profits and a more detailed look at the numbers regarding those claims. According to Woodward, farm and construction machinery, Tupperware, the railroads, Hershey sweets, Yum food brands and Yahoo are all more profitable than the health insurance industry.
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.
