Insurance Companies Starting to Get Buyer’s Remorse?

Initially America’s Health Insurance Plans (AHIP) was very supportive of the Administration’s plan to reform healthcare. They felt that the partnership would actually be beneficial to both them as well as the government. But then in August of 2009, the government began a campaign vilifying the insurance industry using terms such as ‘corporate greed’ in order to gain support by a public that was being propagandized against the free market.

AHIP agreed that issues such as cost-contaiment and pre-existing conditions needed to be addressed in some kind of reform package but concluded:

“At the same time, specific provisions in this legislation will increase, rather than decrease, health care costs; reduce coverage options; and disrupt existing coverage for families, seniors and small businesses – particularly between now and when the legislation is fully implemented in 2014. The Atlantic

And it’s because the insurance industry has been repeating this claim, which would derail the government’s goal to pass universal healthcare, the Administration has reported that this only shows that the “greedy insurance companies” are only trying to hold on to their greedy practices. The media even played a part to perpetuate this hatchet job by saying that the insurance industry was making billions in profits.

Obama has touted “There have been reports just over the last couple of days of insurance companies making record profits, right now,….. “At a time when everybody’s getting hammered, they’re making record profits, and premiums are going up. What’s the constraint on that? … Well, part of the way is to make sure that there’s some competition out there

Even Polifact states that is totally untrue:

For the quarter, UnitedHealth earned $859 million. But that’s not a record for quarterly net income. During the same period in 2007, for example, its net income was $1.23 billion.

We reviewed the income statements of the other largest publicly traded health insurance companies — WellPoint, Aetna, Cigna, Humana and Coventry Health Care — and found similar trends. Generally speaking, profits were higher during 2007 and 2006, before the economy began its slide. So Obama’s modifier “record” does not appear to be correct.

UnitedHealth Group (UNH) – $3.49 billion (B) on revenue of $84.27 B for a profit margin of 4.14%

Humana (HUM) – $0.85 B on $30.25 B for 2.79%

Wellpoint (WLP) – $2.43 B on $60.59 B for 4.00%

Cigna (CI) – $0.60 B on $18.93 B for 3.20%

For these four companies, the total is $7.37 B on $194.04 B for 3.80%. Given that these are four of the largest and best-managed companies in the industry, it’s not surprising that other companies would pull the margin down to 3.3%. Besides, this would still put health insurance in the #73 slot on the list. Feel free to check the key statistic pages in Yahoo! Finance, which is where I got these numbers, to confirm this

But demonizing the free market is what the Obama administration seems to do best. It’s all about propaganda, propaganda to sell to the public socialized medicine.

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