It is said that the famous English statesman Benjamin Disraeli countered his opponents’ claim that “Figures do not lie” with, “There are three kinds of lies: lies, damned lies, and statistics”.
Such may be the case with the recent findings from Weiss Ratings(1)–perhaps the only independent provider of insurance company ratings.(2) Weiss surveyed health insurers and found that companies that were already complying in 2009 with the health reform act had average net profit margins of “only” 0.7%, while those not yet complying had average net margins of 6.3%, or nine times more. Which is a graphic way of demonstrating just how much the other insurance companies have made by denying coverage, dropping people from their rolls, and jacking up premiums.
The top five health insurance companies reported a record $12.2 billion in net earnings last year. That’s huge. And the top executives at 10 for-profit companies have pocketed nearly $1 billion in compensation in the last 10 years. That’s staggeringly huge. As a group they received a 167% pay raise in 2009, while spending a breathtaking $768,864,642 since 2007 on federal lobbying to influence public policy and elected officials.(3)
To gauge the impact of healthcare reform on the industry’s earnings, the Weiss study covered 543 health insurers, distinguishing between two groups:
• 226 not-yet-compliant companies — those that spent less than 85% of their premiums on medical expenses in 20092
• 317 already-compliant companies — those that spent 85% or more of their premiums on medical expenses in 2009.
Weiss also found that, including income from both their insurance underwriting operations and from their investments, the already-compliant companies earned a total of $1.74 billion, or an average of $5.5 million each. In contrast, the not-yet-compliant companies earned far more — $7.68 billion, or an average of $34 million each.
So, let’s not take out our hankies yet. The insurance companies are far from suffering anything other than anticipatory grief as profits go down. And just think how much more care can be provided with that much money!
2 Weiss Ratings accepts no payments for its ratings from rated institutions. It is among the nation’s leading providers of independent ratings on 8,000 U.S. banks and S and Ls and the only provider of independent ratings on the nation’s 4,200 insurance companies.
3 http://www.huffingtonpost.com/ethan-rome/battle-in-seattle-over-in_b_680326.html. Accessed August 12, 2010
Rampant greed seems to be at the core of rotting of the American Dream. I wonder when we will wake up to this reality and if we will have the compassion and boldness it will take to prevent our demise.
Here is the dilemma: we have huge, publicly traded insurance companies whose executives believe that their primary obligation is to their investors. And we have huge, publicly traded health care organizations whose executives also believe that their primary obligation is to their investors. And these two entities contract with each other to provide services to the public.Who looks out for the patient? Doctors and nurses? Perhaps, but increasingly we are employed by these organizations… Leah C.
It appears that we need to take a close look at our purpose. Providing quality safe healthcare to as many people as possible. Business and Medicine combine only when they have a unified mission. How did we get so off track?