Health insurers don’t make egregious profits.
“We are held hostage at any given moment by health insurance companies that deny coverage or drop coverage or charge fees that people can’t afford.” — Barack Obama, Aug. 14, 2009.
“We’re seeing this at the same time where not only is there an economic downturn around the country, but we know that insurance companies are not suffering that same kind of downturn. The five largest insurers in America have declared more than $12 billion worth of profits in 2009.” — Health & Human Services Sec. Kathleen Sebelius.
“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.” — Barack Obama, July 2009.
The Saint Petersburg Times’ Fact Check already debunked the last of the three hate-inciting whoppers by the Obama administration, and many others have as well, but that hasn’t changed much. It’s great to read that Mr. Obama is all for “some competition” but it comes off as an empty statement considering that Democrats have gone out of their way to exclude any Republican idea to increase the same, such as insurance pools for individuals, or allowing insurance companies to cross state lines. Democrats are only for “competition” when it means the government getting into the act — but it’s hard to compete with an entity that may borrow perpetually, has no budget, need not answer to its stockholders (i.e., the taxpayers), can print money, and spend any amount it desires. This is competition? If that’s so then the U.S.S.R. was the epitome of free enterprise!
But more to the point of this post: The Obama camp lies. Or at very least exaggerates for anger’s sake. It’s hard to believe they don’t have the data.
Insurance companies don’t make record profits. Indeed they make far less than most industries.
Jeff Anderson explains:
According to the most recent Fortune 500 rankings, health insurers are not even among the top-30 United States industries in profit-margin. Health insurers rank 35th, with a profit-margin of just 2.2 percent — less than one-fifth the profit-margin of railroads. None of the ten largest American health insurers made profits of more than 4.5 percent, and two of them lost money. Health insurers’ collective profit-margin is less than one-eighth that of drug companies and less than one-seventh that of companies that sell medical products or equipment. It’s also less than that of medical facilities. Yet when was the last time you heard President Obama rail against greedy hospitals?
The combined profits of America’s ten largest health insurers are $8.3 billion. That’s less than two-thirds of the profits of Wal-Mart alone, less than half of the profits of General Electric alone, and less than one-seventh of what Medicare loses each year to fraud. Health insurers collectively have one-eighth the profit-margin of McDonald’s or Coke, one-ninth that of eBay, and one-fifteenth that of Merck.
Why don’t these much more profitable companies or industries need to be taken over by the federal government? Why don’t they need to be subjected to something like President Obama’s proposed Health Insurance Rate Authority, which would be run by the same U.S. Department of Health and Human Services that already loses $60 billion of taxpayer money to Medicare fraud each year? (Not that I want to give the Obama administration any ideas.)
In all, the combined profits of the 14 largest American health insurers (the ones who crack the Fortune 1000) are $8.7 billion. That’s less than 0.4 percent, or 1/250th, of overall U.S. health-care costs, which are $2.5 trillion.
Anyone but an ideologue could plainly see that insurance profits aren’t the problem. The problem is having a health-care system with too many middlemen (government or otherwise); too little competition and choice; and too little opportunity for Americans to control their own health-care dollars, shop for value, or even see prices.
If you can’t identify the problem, you aren’t likely to stumble upon the solution. Maybe that’s why the Congressional Budget Office says that, under Obamacare, which would cost $2.5 trillion in its real first decade (2014 to 2023), the average family’s insurance premiums in the individual market would increase by $2,100 in relation to current law — while under the House Republican health bill, which would cost $61 billion (just 2 percent as much as Obamacare), the average premiums would be reduced by 5 to 8 percent.
President Obama likes to say that the Republicans don’t have any ideas, but the House GOP bill would clearly make the American health-care system better. The small bill would make it better still. Obamacare would raise nationwide health costs, siphon billions out of barely solvent Medicare and spend them elsewhere, cut Medicare Advantage benefits by an average of $21,000 per beneficiary in its real first decade, politicize medicine, reduce liberty, raise taxes, cost jobs, and inevitably lead to rationed care.
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