FACT CHECK: Profits for Health Insurance Companies Far From Fat
October 27, 2009 | Filed Under Barack Obama, Budget, Business, Capitalism, Democrats/Leftists, Economy/Finances, Government, Corruption, Health, Journalism, Liberals, Media Bias, President, Society/Culture, Warner Todd Huston | Comments Off
-By Warner Todd Huston
The Associated Press posted an interesting piece revealing that the health insurance industry is far from the image that Democrats and other leftists want to present. Insurance companies are so often presented as rapacious, fat-cats ripping off all their customers and growing fat on profits. But the AP finds that reality does not quite fit the left-wing image.
In fact, the insurance industry makes far less profits than other industries. As the AP notes, the Hershey chocolate company even has a higher profit margin than health insurers.
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.
Ooopsie! Looks like the image of the fat-cat insurance company is not so pat as the far left and their Democrat enablers want you to believe.
The AP goes on to prove that the health insurance industry brings in profits at a much, much lower level than that of other industries making absurd the claim that they are some of the richest industries of all.
Health insurers posted a 2.2 percent profit margin last year, placing them 35th on the Fortune 500 list of top industries. As is typical, other health sectors did much better – drugs and medical products and services were both in the top 10.
The railroads brought in a 12.6 percent profit margin. Leading the list: network and other communications equipment, at 20.4 percent.
Worse for the far left, the AP shows that profits for the health insurance companies did not grow exponentially during the Bush years as the left constantly claims. Profit margins grew at 8.8 percent between 2003 and 2008 with the margin never growing more than 8 percent between 2005 and 2008.
So what of America’s other industries?
The latest annual profit margins of a selection of products, services and industries: Tupperware Brands, 7.5 percent; Yahoo, 5.9 percent; Hershey, 6.1 percent; Clorox, 8.7 percent; Molson Coors Brewing, 8.1 percent; construction and farm machinery, 5 percent; Yum Brands (think KFC, Pizza Hut, Taco Bell), 8.5 percent.
Looks like the health insurance industry is right in line with everybody else! No “obscene profits” at all.
There is, however, one thing about health insurance company profits that is a bit ironic in light of the demonization that the extreme left and their Democrat buddies have castigated insurance companies over. These profits will increase due to Obamacare’s insistence that every American be forced to buy health insurance.
A hardy congratulations goes to the AP for this report.
____________
Warner Todd Huston is a Chicago based freelance writer, has been writing opinion editorials and social criticism since early 2001 and is featured on many websites such as RightWingNews.com, CanadaFreePress.com, StoptheACLU.com, TheRealityCheck.org, RedState.com, Human Events Magazine, AmericanDailyReview.com, and the New Media Journal, among many, many others. Additionally, he has been a frequent guest on talk-radio programs to discuss his opinion editorials and current events and is currently the co-host of “Life, Liberty, and the Pursuit of Conservatism” heard on BlogTalkRadio. Warner is also the editor of the Cook County Page for RedCounty.com.
He has also written for several history magazines and appears in the new book “Americans on Politics, Policy and Pop Culture” which can be purchased on amazon.com. He is also the owner and operator of PubliusForum.com. Feel free to contact him with any comments or questions : EMAIL Warner Todd Huston
Fair Use: This site may contain copyrighted material the use of which has not always been specifically authorized by the copyright owner. I am making such material available in my efforts to advance understanding of political, human rights, economic, democracy, and social justice issues, etc. I believe this constitutes a ‘fair use’ of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have expressed a prior interest in receiving the included information for research, educational, or satirical purposes. If you wish to use copyrighted material from this site/blog for purposes of your own that go beyond ‘fair use’, you must obtain permission from the copyright owner.
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