Obscene profits?
After spending 15 years in the newspaper business, I can assure you that I’m familiar with obscene profits. Back in the days before Craigslist came along to decimate their lucrative classified ad sales, newspapers commonly turned 30-40 percent profit margins – and my meager paychecks were proof of that.
So, when Democrats demonize the health insurance industry over their profits, I’m expecting to see newspaper-level profits.
It turns out, when it comes to insurance industry profits, the only thing that’s obscene are Democrats’ lies.
Quick quiz: What do these enterprises have in common? Farm and construction machinery, Tupperware, the railroads, Hershey sweets, Yum food brands and Yahoo? Answer: They're all more profitable than the health insurance industry.
In the health care debate, 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.
Sure enough, according to Forbes magazine, the health insurance industry made an anemic 2.2 percent profit last year. Hospitals made a 2.4 percent profit. If you want to be outraged about “obscene” profits, try the railroad industry (seriously) which made a whopping 12.6 percent profit.
The only thing more surprising than these numbers is the fact that it took the news media six months to get around to reporting them.
Better late than never.
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We could confiscate the entire health insurance industry's profits to help pay this country's health care bills. Guess how many days that money would buy us? Four days a year. That's it. The rest of the year we would be on our own with no one to demonize.
At least the insurance industry has a decent record combating fraud. Look at this 60 minutes feature to see how well the US government does the same.
http://newsbusters.org/blogs/noel-sheppard/2009/10/25/60-minutes-medicare-fraud-raises-troubling-questions-about-our-govern