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 percentage point or two. That's anemic compared with other forms of insurance and a broad array of industries, even some beleaguered ones.
Aren't the multiple scare quotes a nice "touch?" Because the Democrats are just being hysterical about the eeeeeeeevil insurance companies. Why, health insurance companies posted an average profit margin of only 2.2 percent last year! Which is only good for 35th place on the Fortune 500 list of top industries! So why are Democrats whining about how much money Cigna rakes in when its credit rating is tanking, and health insurance in general is outperformed by Tupperware and Coors?
After mulling the question for perhaps two seconds--hey, the bright and shiny objects in my office distracted me for a while there--I came up with two reasons for not shedding tears over my insurer profiting less than Clorox. Number one, I don't really need Clorox on a regular basis, much less Tupperware and Christ on an ignored hop-plant, Coors. My bleaching and food storage and beer needs are met, wonder of wonders, by the company whose product is on sale this week, and if things are tight it's not much of a problem to do without for a while, or improvise something on my own, or borrow from a friend.
My healthcare needs, on the other hand, can't exactly be put off, and, as the past 27 goddamn days have illustrated in a big way, can't be shopped around--Boltgirl is not made of money--or nicked from my neighbor's pantry. Don't get me wrong; I'm very grateful that I have insurance and that it only sets me back about twenty bucks out of every paycheck, plus about $150 out of pocket for the flu-related doctor visits and prescriptions. But if my plan sucked? Good luck finding a similar level of coverage in an individual plan for the same costs. I wouldn't be able to; that's what pooled risk is all about.
Speaking of being made of money, number two looks something like this.Company and CEO's 2008 Total Compensation:
Cigna $12.2M (a 50 % drop from 2007! oh noes)
Coventry Health Care $9.0M
Health Net $4.4M
Universal American $3.5M
UnitedHealthGroup $3.2M (although "in May 2006, the amount of Hemsley's supplemental retirement benefit was frozen based on his current age and average base salary and converted into a lump sum of $10,703,229.")
Another list that breaks the numbers down into base salary, stock options, and cash bonuses is available here. So from the perspective of obscene piles of cash being thrown at executives who may or may not have "earned" it, depending on your definition of "earn," the health insurance industry isn't necessarily much more or less revolting than, say, any investment bank still in business.
But a lot of people--Democrats and their allies included--see the compensation as "obscene" when cash bonuses representing five, seven, ten times a million-dollar base salary are funded by annual rate increases on the order of 20 percent. This isn't a cable TV or high-speed internet level of luxury item we're talking about here. It's the ability to go to the doctor when you're sick, or, better yet, before you're sick, for preventative care. It's the ability to, oh, say, not die from a preventable condition or treatable-when-caught-early disease. It's an industry that we're beholden to with little choice in provider (well, those of us not, as mentioned before, made of money), so when those providers rake in the cash, yeah, "rapacious profiteer" isn't a bad term at all.
Thanks for reminding us that it's all about the bottom line, AP.