AP Reports Health Insurance Company Profits Not Very High
I’m sure most of you are aware that health insurance companies have been just about every Democrats favorite whipping boy in the ongoing health care reform debate. Their profits are obscene and so on goes the rhetorical line out there and the companies are allegedly the cause of the explosion in health care costs in America. Well, a reporter at the AP went and did some checking and it turns out, according to the AP that across the health insurance industry profit margins are nowhere near the 25 percent some people claim.
“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….”
“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.”
Interesting stuff, but it doesn’t make me sympathize with health insurance companies because they are a gigantic pain to deal with.
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