Obama '08?

@plainoldme,

H2O MAN wrote:

It sounds like POM is not satisfied with the petulant, effeminate little boy in the White House... she's not alone.

plainoldme wrote:

No one gave you permission to make assumptions about my thoughts. Please refrain.
You are no one I wish to be intimate with and I would not share my feelings with you.

Liquid lunch?

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@Cycloptichorn,

I fail to understand how the Republicans can ignore the enormous profits that insurance companies make.

I think it is deplorable that so many righties who oppose abortion think it is just ducky for insurance companies to refuse to cover kids with cancer and other "preconditions." Remember the vote to allow health care for kids from families with marginal incomes. It must be that Calvinist streak in the American right: if you can't pay out of pocket, it is a sign that god predestined your kids to suffer and die.

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@plainoldme,

plainoldme wrote:

I fail to understand how the Republicans can ignore the enormous profits that insurance companies make.

Do you really know that to be true? In Cyclo's words, do you have any evidence with which to support your assertion? A very large fraction of the principal insurers are not-for-profit entities. How does that fit in your view? What would you define as an "enormous profits"?

Would you prefer that we abolish profits altogether and create some alternate incentives for people to work and create businesses? The historical track record for such alternatives appears to have its own down side.

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@georgeob1,

Here's a list of health insurance company profits/(loss): http://www.fortunesmallbusiness.com/magazines/fortune/fortune500/2007/industries/Health_Care_Insurance_Managed_Care/1.html

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@cicerone imposter,

Well your data shows that the 13 listed health care firms averaged 5.3% of revenue as profit. The highest profit went to Coventry Heralth care which made 7.2%: the lowest was Centene which lost 2% of revenue. The four largest companies (UHG, Wellpoint, Aetna, & Humana) made 5.4%.

These are lower profits than those earned by about 70% of successful firms. This is a level of earnings that provides them very little margin for growth, new innovations or investment. In normal times one could do better investing in Treasury Bills.

In any event, Cicerone has offered the highest standard of proof ( a web link !!!) that the contention of Cyclo and Plainoldme that health insurers are making extraordinary profits is clearly FALSE.

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@georgeob1,

Quote:

A very large fraction of the principal insurers are not-for-profit entities.

Are these the groups who are complaining that they will no longer be able to do business in certain place? Or is it the for-profit groups? My guess (without actually checking) is that it is the latter.

I would also point out that some of these 'non-profits' sure seem to pay high salaries for their executives....

Cycloptichorn

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@Cycloptichorn,

Cycloptichorn wrote:

I would also point out that some of these 'non-profits' sure seem to pay high salaries for their executives....
Cycloptichorn

I will agree with that. The non profit "research institutes" like Battelle labs and other like groups as well as Labor Unions generally provide compensation for their execs comparable to the top wall street firms. I have several good friends among Union leaders in the Bay area. The top leaders typically collect distinct paychecks (and retirement income) from both the local union they represent and the national union- each one enough for comparable efforts anywhere else. Unions are a great racket - you don't even have to invoice your "clients". The government forces them to wire you the cut of their member's pay directly without even going through the "duespayer".

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@Cycloptichorn,

Cycloptichorn wrote:

Are these the groups who are complaining that they will no longer be able to do business in certain place? Or is it the for-profit groups? My guess (without actually checking) is that it is the latter.

Cycloptichorn

I don't know. However it is likely to include both types. All have auditors and Boards which are required by law to ensure that they remain actuarily sound. This, of course isn't always done, however the lapses are usually highly publicized and far outnumbered by firms that take these responsibilities seriously.

Back to the profits. Even in my relatively very small company and industry, a 5% profit would be considered seriously substandard. The industry average is closer to 8% and well-run firms generally stay above 10%. (Steve Jobs, of course would sneer at numbers like these.)

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@georgeob1,

We have had this discussion before...probably a goodly while ago and perhaps on another thread. I am, for starters, siding with Georgeob. I would like to see some actual financial evidence regarding excessive profits in the health insurance industry. Cicerone posted some stuff. Can we agree on choosing one of the companies in the insurance realm to look at more closely?

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@georgeob1,

goergeob, I agree with your assessment about profit. They still have to have some contingency reserves in addition to payout of dividends to their shareholders.

The way I read the profit margins is that they are a very competitive market, and that's the way capitalism (should) works.

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@realjohnboy,

Not a bad idea. The top firms in terms of revenue & client numbers in Cicerone's list United Health Group, Wellpoint, Aetna, Humana, and Cigna, in order. Together they represent 84+% of the total revenues of the 13 firms on Cicerone's link. I'm not sure of the for profit/not for profit mix in this group, but it should be easy to find out.

It is interesting to note that Cicerone's link also provides the % change in profits from the previous year (2005) - the firms averaged about 20% increases in profits from the previous year but much larger increases in revenue, which indicates that their profgits were declining in 2006 - even at these low levels.

Everyone complains about the constraints & chickenshit applied by insurers to healthcare costs. However that is how they limit fraud and abuse. The government is generally far less effective at that sort of thing - whitness the 200 million Medicare scam just uncovered a couple of days ago. When we end up on a bureaucratically "managed", bankrupt healthcare system with pipsqueak clerks who that tell us how much of a shrinking pot we are entitled to, we will have lots of time to regret this "change".

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@georgeob1,

georgeob1 wrote:

Not a bad idea. The top firms in terms of revenue & client numbers in Cicerone's list United Health Group, Wellpoint, Aetna, Humana, and Cigna, in order. Together they represent 84+% of the total revenues of the 13 firms on Cicerone's link. I'm not sure of the for profit/not for profit mix in this group, but it should be easy to find out.

It is interesting to note that Cicerone's link also provides the % change in profits from the previous year (2005) - the firms averaged about 20% increases in profits from the previous year but much larger increases in revenue, which indicates that their profgits were declining in 2006 - even at these low levels.

I'm looking for an article I read a while back that discusses it, but one question that I had: do those profit numbers reflect the actual bottom line of these companies, or the amount that they clear at the end of the year after INVESTING that money? The article in question was an investigation of poor investments that had been made by various companies in the insurance industry, which then lead to them raising rates in order to keep profits the same (or higher).

Cycloptichorn

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@Cycloptichorn,

That is an interesting question, Cyclo, and I don't know the answer. Insurance companies invest premium revenue until they need the money to pay claims. How those investments performed is, I suspect, disclosed in the financials.
Executive pay is likely to be harder to extract, as is the amount of money spent on advertising. Those are 2 issues often raised.
So is there a large publicly traded company focusing on health insurance we might try to look at?

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@cicerone imposter,

I have a feeling that the insurance companies hide their money by investing in money losing ventures managed by relatives, friends or ethnic group. The bad performance hide their profits hence the low profits. Insurance companies make their money from the payments and they fight for every penny against paying claimants.

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@talk72000,

talk, In our capitalistic society, we have choices about what service or goods we buy. When the consumer buys anything, they do so by choice. How the company makes its money or spends it is not the consumer's responsibility; it's the company management and board that decides those issues.

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@cicerone imposter,

They are avoiding the taxes and benefitting themselves. The mafia does that. The difference is that it is a white collar crime and the US Government does not go after white collar criminals who do most of the damage like the financial meltdown.

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@talk72000,

There are legal ways to avoid taxes; all good accountants work hard at doing this. Most companies listed on the big board are required to have outside audits performed, and certified as presented. If they are caught cheating, it's penalties, taxes, and interest they will have to pay.

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@Cycloptichorn,

Cycloptichorn wrote:

I'm looking for an article I read a while back that discusses it, but one question that I had: do those profit numbers reflect the actual bottom line of these companies, or the amount that they clear at the end of the year after INVESTING that money? The article in question was an investigation of poor investments that had been made by various companies in the insurance industry, which then lead to them raising rates in order to keep profits the same (or higher).

Cycloptichorn

Good question. In fact insurance companies of all types (life, property, health)are in the business of investing the cash they hold against actuarial losses to make or enhance their profits. To use your phrase this is a built in feature of the business model. In good times, when investment profits are large, everybody wins because the pressures on their rates to policy holders are reduced and state regulators & competitive market forces hold down rate increases. In bad times everyone suffers. However, one of the features of the business model is prudent, balanced investing and cash reserve levels that reflect market uncertainty. For the most part this works - apart from AIG which was a special case, we didn't see any insurance companies go under in the rtecenty market collapse.

Consumers benefit when investment returns are high and suffer when they are low. That is a built in feature of the contract.

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@cicerone imposter,

The issue is not so much "profits" but it is also the overhead

United Health's financial for the last 4 years.
http://money.cnn.com/quote/financials/financials.html?symb=UNH

While their cumulative profit may have been slightly less than some of the DOW components over the 4 years it has been steady and reliable every year.

The real issue is the amount of money paid out in claims.
UNH pays out in claims and loss about 80-82% of it's premiums.
Medicare pays out in claims and loss between 94.8 and 98% of it's collected moneys depending on the study.

A recent study by Mark Litow found Medicare has 5.2% in administrative costs and Private health insurance has 16.7% cost when premium commission, tax and profit are included in the cost.
At that rate fraud in Medicare could be 10% and the cost would still be less than private health insurance if we make the wild assumption that there is no fraud in private health insurance.

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WHAT IF after Obama is impeached by a majority of the House, but the Senate doesn’t have the two-thirds majority to remove him?

The impeachment trial will nevertheless provide the voters in 2012 evidence for Obama’s removal.

What will be lost for impeaching but not yet removing Obama? What will be gained for not trying to remove Obama?

1 Reply

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