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October 25th, 2009 | 
Author: Private health insurance companies have been demonized by the Democrats and the administration as modern day “robber barons” who are raking in obscene profits mostly by denying you coverage. But a simple fact checking dispels that sort of an attack as negative propaganda with no basis in 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.
In other words, the methodical demonization of private insurance by government has put the industry on very shaky footing. Should a public option – defined as the government selling insurance or, as the Democrats are trying to rebrand it, Medicare part E – be placed into law, there’s a distinct possibility that the private market may dry up. Another untruth the government is pushing is that it’s entrance into the market will offer “choice and competition”. In fact, with the unlimited borrowing power of the US Treasury backing the public option and no requirement to make an profit, there will likely be less competition and at some point no real choice.
A little reality check pertaining to the industry:
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.
Congress v. Insurance Industry
It is pretty tough to characterize an industry making an average 2.2% profit margin as one which is exploiting its customers. As a comparison:
The railroads brought in a 12.6 percent profit margin. Leading the list: network and other communications equipment, at 20.4 percent.
Can anyone point me to the government characterization of those two industries making obscene profits or exploiting their customers? Apparently the government has no plans to take them over – yet.
In fact, the private health insurance industry isn’t at all in the ‘obscene profit’ category and falls more in the “average” category when it comes to comparison to other industries in various sectors:
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.
In this case the devil isn’t in the details, it is instead in the factually incorrect and disingenuous attack of politicians.
~McQ
Posted in Bruce McQuain, Democrats, Freedom and Liberty, Government, Health Care, Nanny State, Obama Administration, capitalism | 
Tags: health insurance industry
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I dont prefer large business to small business, I understand that sometimes companies will act recklessly or even illegaly, and I am against all forms of corporate welfare.
But what I nave never understood is the impulse to demonize large corporations. These are the companies that provide the goods and services people want, or else they wouldn’t be so large. They are also the companies with the well paying jobs that everyone wants. Sure they will take advantages if allowed to. But they are not big evil entities, they are made up of people like everyone else.
This is part of the reason that I have always thought that the left was ruled by wrong ideas, bad faith, and the baser emotions.
This was brought up in a forum I frequent.
The lefties response was to derail the thrust of the article by making a big issue about whether they was talking about gross profits, net profits, or operating profit.
Trust me, they’re prepare to insulate the public from the facts.
from the 5 minutes i spent looking most of these companies don’t even gross 10bil in profit which paltry compared to the likes of Microsoft at 46 bil, Coca Cola 20 bil, walmart 99 bil, and intel 20 bil.
Anybody know of any public traded law firms, i wonder what there profit margins are.
Would I be wrong to guess that they also rail about how much big insurance execs are paid and also studiously avoid talking about percentages but instead like to yap about straight dollar amounts?
jpm 100,
Might be a better number to look out since 2000 at how much their profits had jumped and not just a year when markets tanked, along with health care profits, as in 2008. A terrific number of takeovers and mergers have led to some states having monopolies. And, I like you don’t have a problem with mergers until one gets a state that is monopolized.
Bruce, I must congratulate you on your “Congress v. Insurance Industry” graphic. It stands out, it is pretty, and it communicates a basic truth without distortion. It avoids the common exaggerations detailed in the classic book “How to Lie With Statistics.” The graph begins at a base of zero, the two columns have the same width and depth, the vertical scale is proportionate and clearly labeled, and so on.
If anything, the graph slightly understates your case. The “Health Insurance Industry” column is clearly at 2.2% as labeled, but the “Congressional Raises” column seems to me to be at 2.7% rather than the labeled 2.8%.
In contrast, I used the movie “An Inconvenient Truth” to illustrate bad graphics in my Finite Mathematics class. We all had fun pointing out the various deceptions in the graphics.
Rory, you ought to put that lecture on youtube, I bet it will get a lot of hits.
I purchase my own private healthcare insurance in the USA: flu shots and physicals are free of charge because they are preventative medicine.
Using my Taiwan national healthcare (which is paid by employers…LOL) my flu shot is not available until December and I have to pay for some portion of the cost.
[...] Reid, Nancy Pelosi and their minions have attacked the health care insurance industry for making obscene profits at the expense of the people. Really? Where is the data that backs up the Democrats demonization of [...]
[...] [...]
[...] found out recently that the government perpetrated myth that the health insurance industry were a bunch of “robber barons” was a load. So how about this point that it likes to push about “waste” in our health [...]
[...] McQuain: We found out recently that the government perpetrated myth that the health insurance industry were a bunch of “robber barons” was a load. So how about this point that it likes to push about “waste” in our health care [...]
[...] Job Killers for Health Care Reform and Can You Imagine If Republicans Handed Out White Coats QandO: Fact Checking The Democrats – Private Health Insurance Quin Hillyer, American Spectator: Not Abiding Obama Ztower: Axelrod video all but confirms Obama [...]
[...] Related reading: Wall Street Journal: Political Wisdom: Lieberman in the Cross Hairs RedState: Harry Reid Blames the AMA. Can’t Bring Himself to Blame RedState The Snooper Report: Obama And Reid Continue Secret Health Care Negotiations The Patriot Room: $1,000 fine for not getting health insurance Diary of a Mad Conservative: Government health care should scare everyone Philip Klein, American Spectator: “60 Minutes” to Take on Medicare/Medicaid Fraud Rep. Tom Price (R-GA), Big Government: Government Still Trying To Take Over Health Care HillBuzz: Most transparent government ever? Nancy Pelosi blocks public from taking part in healthcare legislation Nice Deb: Video: Don’t Shut Us Out Ztower: Top White House advisor in closed door meeting with Senators. Hey! Where are the C-SPAN cameras? Michelle Malkin: Obamacare doctor bribe fails in Senate, Reid whines and Is your teacher lobbying for Obamacare at school today? and The “vapor bill” materializes, but don’t spend too much reading it and Shhhh: Sneaky Dems create Obamacare reconciliation loophole Gateway Pundit: Fearmongering First Lady Pushes Nationalized Health Care (Video) and Far Left Crank Krugman Casually Refers to “Teabaggers” in Latest Column Gregory Conko, Big Government: Baucus Bill is a Cure Worse than the Disease James C. Capretta, National Review Online: The Baucus Death Spiral Kyle Olson, Big Government: Lest We Forget: SEIU, ACORN Behind Ongoing Push For Socialized Medicine Fortune, CNN Money: 5 freedoms you’d lose in health care reform Barry Goldwater Jr., American Spectator: Health Care Amtrak-Style Le·gal In·sur·rec·tion: Job Killers for Health Care Reform and Can You Imagine If Republicans Handed Out White Coats QandO: Fact Checking The Democrats – Private Health Insurance [...]
[...] Related reading: Gateway Pundit: Rush On FOX News Sunday: This Is the Biggest Snatch Yet of Freedom & Liberty in this Country Wall Street Journal: Political Wisdom: Lieberman in the Cross Hairs American Power: Democrats Unveil Crypto-Marxist ObamaCare Monstrosity! RedState: Harry Reid Blames the AMA. Can’t Bring Himself to Blame RedState The Snooper Report: Obama And Reid Continue Secret Health Care Negotiations The Patriot Room: $1,000 fine for not getting health insurance Diary of a Mad Conservative: Government health care should scare everyone Philip Klein, American Spectator: “60 Minutes” to Take on Medicare/Medicaid Fraud Rep. Tom Price (R-GA), Big Government: Government Still Trying To Take Over Health Care HillBuzz: Most transparent government ever? Nancy Pelosi blocks public from taking part in healthcare legislation Nice Deb: Video: Don’t Shut Us Out Ztower: Top White House advisor in closed door meeting with Senators. Hey! Where are the C-SPAN cameras? Michelle Malkin: Obamacare doctor bribe fails in Senate, Reid whines and Is your teacher lobbying for Obamacare at school today? and The “vapor bill” materializes, but don’t spend too much reading it and Shhhh: Sneaky Dems create Obamacare reconciliation loophole Gateway Pundit: Fearmongering First Lady Pushes Nationalized Health Care (Video) and Far Left Crank Krugman Casually Refers to “Teabaggers” in Latest Column Gregory Conko, Big Government: Baucus Bill is a Cure Worse than the Disease James C. Capretta, National Review Online: The Baucus Death Spiral Kyle Olson, Big Government: Lest We Forget: SEIU, ACORN Behind Ongoing Push For Socialized Medicine Fortune, CNN Money: 5 freedoms you’d lose in health care reform Barry Goldwater Jr., American Spectator: Health Care Amtrak-Style Le·gal In·sur·rec·tion: Job Killers for Health Care Reform and Can You Imagine If Republicans Handed Out White Coats QandO: Fact Checking The Democrats – Private Health Insurance [...]
[...] Related reading: Gateway Pundit: Rush On FOX News Sunday: This Is the Biggest Snatch Yet of Freedom & Liberty in this Country Wall Street Journal: Political Wisdom: Lieberman in the Cross Hairs American Power: Democrats Unveil Crypto-Marxist ObamaCare Monstrosity! RedState: Harry Reid Blames the AMA. Can’t Bring Himself to Blame RedState The Snooper Report: Obama And Reid Continue Secret Health Care Negotiations The Patriot Room: $1,000 fine for not getting health insurance Diary of a Mad Conservative: Government health care should scare everyone Philip Klein, American Spectator: “60 Minutes” to Take on Medicare/Medicaid Fraud Rep. Tom Price (R-GA), Big Government: Government Still Trying To Take Over Health Care HillBuzz: Most transparent government ever? Nancy Pelosi blocks public from taking part in healthcare legislation Nice Deb: Video: Don’t Shut Us Out Ztower: Top White House advisor in closed door meeting with Senators. Hey! Where are the C-SPAN cameras? Michelle Malkin: Obamacare doctor bribe fails in Senate, Reid whines and Is your teacher lobbying for Obamacare at school today? and The “vapor bill” materializes, but don’t spend too much reading it and Shhhh: Sneaky Dems create Obamacare reconciliation loophole Gateway Pundit: Fearmongering First Lady Pushes Nationalized Health Care (Video) and Far Left Crank Krugman Casually Refers to “Teabaggers” in Latest Column Gregory Conko, Big Government: Baucus Bill is a Cure Worse than the Disease James C. Capretta, National Review Online: The Baucus Death Spiral Kyle Olson, Big Government: Lest We Forget: SEIU, ACORN Behind Ongoing Push For Socialized Medicine Fortune, CNN Money: 5 freedoms you’d lose in health care reform Barry Goldwater Jr., American Spectator: Health Care Amtrak-Style Le·gal In·sur·rec·tion: Job Killers for Health Care Reform and Can You Imagine If Republicans Handed Out White Coats QandO: Fact Checking The Democrats – Private Health Insurance [...]
[...] [...]
[...] Related reading: Gateway Pundit: Rush On FOX News Sunday: This Is the Biggest Snatch Yet of Freedom & Liberty in this Country Brian Darling, Big Government: Senator Harry’s Vapor Bill Wall Street Journal: Political Wisdom: Lieberman in the Cross Hairs American Power: Democrats Unveil Crypto-Marxist ObamaCare Monstrosity! RedState: Harry Reid Blames the AMA. Can’t Bring Himself to Blame RedState The Snooper Report: Obama And Reid Continue Secret Health Care Negotiations The Patriot Room: $1,000 fine for not getting health insurance Diary of a Mad Conservative: Government health care should scare everyone Philip Klein, American Spectator: “60 Minutes” to Take on Medicare/Medicaid Fraud Rep. Tom Price (R-GA), Big Government: Government Still Trying To Take Over Health Care HillBuzz: Most transparent government ever? Nancy Pelosi blocks public from taking part in healthcare legislation Nice Deb: Video: Don’t Shut Us Out Ztower: Top White House advisor in closed door meeting with Senators. Hey! Where are the C-SPAN cameras? Michelle Malkin: Obamacare doctor bribe fails in Senate, Reid whines and Is your teacher lobbying for Obamacare at school today? and The “vapor bill” materializes, but don’t spend too much reading it and Shhhh: Sneaky Dems create Obamacare reconciliation loophole Gateway Pundit: Fearmongering First Lady Pushes Nationalized Health Care (Video) and Far Left Crank Krugman Casually Refers to “Teabaggers” in Latest Column Gregory Conko, Big Government: Baucus Bill is a Cure Worse than the Disease James C. Capretta, National Review Online: The Baucus Death Spiral Kyle Olson, Big Government: Lest We Forget: SEIU, ACORN Behind Ongoing Push For Socialized Medicine Fortune, CNN Money: 5 freedoms you’d lose in health care reform Barry Goldwater Jr., American Spectator: Health Care Amtrak-Style Le·gal In·sur·rec·tion: Job Killers for Health Care Reform and Can You Imagine If Republicans Handed Out White Coats QandO: Fact Checking The Democrats – Private Health Insurance [...]
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