Search This Blog

Monday, October 26, 2009

FACT CHECK: Health insurers' profits 35th of 53?

In response to "Insurer profits not so fat: Tupperware, Yahoo produce more revenue" (copy and paste for link) ....The refuting of so-called huge profit margins posted by health insurance companies by comparing them to the profit margins of other large corporate businesses is interesting. This article is misleading in that it suggests health insurance companies are no more profitable than other businesses, and in fact are less profitable. The numbers reported appear to make a case for health insurance companies being unjustly profiled and demonized. But in actuality the comparison of profit margins to support such a contention borders on deliberately misleading. The report by the Associated Press, cites a 6% average profit margin for health insurance corporations which is anemic compared to other industries. However, considered as part of any businesses operational expenses are its Executive Salary lines. In the health insurance industry, individual corporate exec salaries can range between 4 to 10 million dollars (typical of the largest companies). Profit is what is left over after all expenses are paid. Executive compensation is still one of the biggest bones of contention that most have with the health insurance companies. Yahoo, Tupperware, Little Debbie, and every other business have an innate responsibility to make as much money as the market will bear. We don't really care how much their top executives make except to perhaps wonder what they spend all that money on. Ultimately, these businesses must produce an excellent product or service or risk failure. But not so with Health Insurance Companies. The sentiment of most is that the administration of our healthcare dollars, the job of our insurance company, should be done at cost. And most of us feel this way because the insurance company doesn't provide the actual service of health care. They are the middleman we have entrusted to use our money to pay our doctors/hospitals when we have to personally access medical care. What doesn't bode well with most people is when we see our health care dollars (what we pay in monthly premiums to our health insurance company) being used to fund huge salaries of the top execs at these companies.
For the reasons cited this is a grossly inaccurrate and misleading article. But not surprising. The reporting follows along the same lines as most other information thrown out for public consumption having to do with the health care debate: inaccurate, convoluted,uninformed, and biased.

No comments:

Post a Comment