Fact-Check: Insurance Company Profits

[JB3]

Apparently Droid you were disputing the fact that the health insurance industry made obscene profits when you began this thread. I'm glad, and feel good, about educating you that you now concede that they do make huge profits.



Rule one in business is that dollar amounts are never inconsequential. I understand the point you were trying to make its just that your focus is wrong. You concentrate too much on margins and not enough on profits. The companies in question do not make "little profit" and if one of them were to be bought out by another they would fetch a price far far higher than YUM brands which makes less than 500 million per yr.

When you try to determine the price you are willing to pay for a company I say earned profits matter more than anything else........can we agree on that?

For their size, their profits are a pittance. And THAT is something that you can't grasp for some reason.

 

[hotatlboi]

For their size, their profits are a pittance. And THAT is something that you can't grasp for some reason.

What you are apparently failing to realize is you need a better understanding of accounting principles and a more detailed analysis of their balance sheet than you have outlined in this thread (or is contained in the article) to make a statement like that.

You really need to do a comparative cost analysis for the past several years and look at the different segments of their expenditures with the trends in revenue increases.

 

[naked gent]

For their size, their profits are a pittance. And THAT is something that you can't grasp for some reason.

I grasp it fine I just think its off point and I'm trying to help you not take the bait.

The first question in business is 'how much money are you making' not 'how big are you' why can't you grasp that?

 

[Kulindahr]

The problem with Pelosi and co. is that they give the impression of some entity raking in piles of bucks. In reality, there are hundreds, if not thousands, of entities (there are two dozen just in a single health insurance investment fund looked at a while back). They're also being misleading in that many Americans will be even less knowledgeable than we here on the matter of profit v margin. A great number of people think of getting large profits as a matter of getting lots of money with little effort, and that hardly applies to the health insurance field.

OK now that you've stated she's being misleading can you tell me why she's being misleading?

Well if it was done it was done by those who are not using terms as they are defined.

Found it!

By definition, the industry as a whole makes huge profits. Break it down into the individual companies, and how many of them do?

My health insurance company makes no profit at all; it isn't allowed to, by its charter -- in fact it gets subsidized by churches.

 

[Kulindahr]

The article says premiums have nearly doubled but profit margins have only increased slightly. That means costs have increased a LOT. The question is, which of those costs were justified, which the article provides no data on.

They could have doubled everyone's premiums, doubled all their salaries (which would be expensed as costs), and had the same profit margin.

If most/all of the increased costs were caused by increases in costs for delivery of health care, or by adding additional payouts, that's fine, but I haven't seen any hard data on that.

There's another place Pelosi is being misleading: she's making a case that these companies are running off with money at the expense of people's health. But until we know what the costs are, and especially what they are in relation to the premiums and all the costs, there's no way to address that.

Seriously, if the companies are taking in a thousand bucks, spending eight hundred and sixty on patient claims, putting sixty aside against future claims, spending fifty-five to run the company, and pulling out the last five for profit, she's got no case -- but if they're pulling out a hundred in profit by squeezing the payouts, she does.

 

[Kulindahr]

Droid, not sure what your point is. Is it that the health insurers are providing an important service, doing it in an efficient and honest way and should be left alone?

That triggered a thought:

maybe what Pelosi ought to be doing is pushing to have stock come with every policy, and the dividends going into a savings account from which copays/deductibles will be paid.