October 26, 2009

Not Such Obscene Profits After All

House Speaker Nancy Pelosi recently said, “I’m very pleased that [Democrat leaders] will be talking, too, about the immoral profits being made by the insurance industry and how those profits have increased in the Bush years.”

Maryland Democrat Rep. Chris Van Hollen complained, “Keeping the status quo may be what the insurance industry wants their premiums have more than doubled in the last decade and their profits have skyrocketed.”

MoveOn.org advertised, “Health insurance companies are willing to let the bodies pile up as long as their profits are safe.”

Oddly enough, however, there’s not a grain of truth in Democrats’ hyperboles. Those evil insurance companies aren’t making obscene or immoral profits after all.

The Associated Press, of all places, has the Fact Check:

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.

That 2 percent profit margin was good for 35th on the Fortune 500 list of top industries. But let’s face it: Health care “reform” has little to do with profits and everything to do with control. Nancy Pelosi just wants you to hate insurers so you won’t mind so much when she runs them.

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