In a scathing report, Democrat Congressman Pete Stark produced a report showing that for 2010, five major health insurers raked in a total of $11.7 billion in net profit, all of it on the backs of the poor and sick.
Indeed, to everyday Americans who are not aware how big some industries are, the $11.7 billion figure may come across as huge and perhaps outrages too. Likely for this very reason, Mr. Stark didn’t reveal some of the following relevant information regarding the 2010 profits of these five firms – United Health, Well Point, Aetna, Humana and Cigna:
· While the five companies combined earned $11.7 billion in profit, governments collected a total of $6 billion in taxes from these companies.
· The $11.7 billion in after-expense and after-tax revenue is from a total of $242.7 billion in income between the above five firms. Yes, of almost a quarter of a trillion dollars in business activity, the firms were left with only $11.7 billion in profit.
· Dividing the above revenue, profit and tax bills in five, each company on average had $48.54 billion in revenue; only $2.34 billion in profit, yet governments – just by standing in the side – collected $1.2 billion from each of the firms.
· Earning $11.7 billion out of $242.7 in revenue is a profit margin of 4.8%, compared to the 10-15 percent returns that index-funds connected to the DJIA, NASDAQ or S&P 500 gave for 2010.
The Stark report writes that 25-30 percent premiums of some health insurance plans were spent on administrative cost in 2010. But starting this year, the report notes, firms will be limited to spend only fifteen to twenty percent on administrative cost/profits collections. In other words, if the 4.8% profit margin is not poor enough, firms will be squeezed even more, and their thousands of workers – you know, workers are the ones that Democrats are always on the look out to protect – will likely need to see cuts and limitations in their compensation.
Any time Democrats scream about ‘billions in profits’ of Corporate America, note A) that the billions in profits mostly represent a fraction of the actual business activity and overhead. B) Government has its hand big time in the cookie charge too, so if they want to give back billions in premiums to Americans, governments can cut their tax rates on the corporations. C) If these attacking Democrats were to have investment consultants that produce for them only 4.8% a year in returns, these investors would likely be fired.
As a bonus, here is the breakdown of the above five health insurers and their business activity of 2010.
· United Health had $94.15 billion in revenue (income); paid $2.74 billion in taxes, and was left with $4.63 billion in after expense/after tax profit.
· WellPoint had $58.80 billion in gross revenue; paid $1.46 billion in taxes, and was left with $2.89 billion in after expense/after tax profit.
· Aetna had $34.76 billion in gross revenue; paid $624.7 million in taxes, and was left with $1.77 billion in after expense/after tax profit.
· Humana had $33.86 in gross revenue; paid $650.1 million in taxes, and was left with $1.1 billion in after expense/after tax profit.
· Cigna (in 2009) had $21.15 in gross revenue; paid (approximately) $526 million in taxes, and was left with $1.34 billion in after expense/after tax profit.
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4 Responses
As private companies, they truly reinvest the money they make by hiring more people, buying more things etc. Unlike Uncle Sam they can’t just print money at will. Insurance companies are also gambling in a way that you won’t need them. Thus if they collect monies in premiums, pay expenses etc., and money is left over, they are free to use it as needed or even keep it in the bank in the event its needed next year.
Despite ObamaLogic, there isn’t finite amount of money that would make it as if their 1000 dollars profit is affecting me as I could make the money some othe way.
In the real world companies show as little profit as they can get away with. I was in business 28 years and made money every year. Only in two years did our accountants apologetically and remorsefully have us show a profit. Profits are buried in payroll and otherwise unnecessary expenditures.
Their profit margins don’t fool me.
This is correct. The profit margins of insurance companies has never been huge, and they have been slammed by the declining value of their investments.
The real problem is not the profits but the administrative overhead. Medicare, a government plan, has one fifth the overhead of a typical private plan. Part of this is from economies of scale, and part of it is that Medicare has no marketing or underwriting expenses. Obamacare will reduce but not eliminate the marketing and underwriting expenses; a “Medicare for all” system would have been much more cost effective but that was not politically possible.
Many conservatives simply can not accept that government can do anything more efficiently than the private sector. That is indeed true for most things, but that is not true for insurance.
3, Sorry Charlie but the govt CANNOT be efficient when it comes to insurance either. The govt WILL ration care under a single payer and if you think it wont you are smoking something illegal! When CHV you are 95 years old and you need treatment for something, are you ready to hear, “Sorry Mr Hall but you lived a long productive life and its time for you to drop dead.”
There is no such thing as an atheist in a foxhole but I am wondering if there will be a liberal in the hospital bed at that time too? Will everyone who supports this evil decree change their mind when they or a relative needs care but they are denied because they are too old and not productive to society? Will these same people not fight to have their kids treated even if the odds are not as good as Uncle Sam wants?
I have seen socialized medicine and I dont understand how anyone can be for it! If the govt was so interested in us having insurance, REAL insurance, they should allow us to claim ANY MEDICAL COST as an exemption, including but not limited to co-pays, premiums, etc.
People really need to wake up. Why would they want to pay even MORE in taxes? Dont we pay enough already? Ok so Charles wants to give more to the govt but normal people DONT!