This AP story sheds light on another misleading claim put forth by Obamacare/Baucuscare/single-payer/public option supporters: that insurance company profits are “immoral” and “obscene.”
In the health care debate, Democrats and their allies have gone after insurance companies as rapacious profiteers making “immoral” and “obscene” returns while “the bodies pile up.”
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.
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.
HealthSpring, the best performer in the health insurance industry, posted 5.4 percent. That’s a less profitable margin than was achieved by the makers of Tupperware, Clorox bleach and Molson and Coors beers.
Such nonsensical political bluster about health insurance companies’ “immoral” profits is reminiscent of the “windfall profits” rhetoric so popular during last summer’s election season.
Statists simply can not refrain from demonizing political opponents or industrial sectors in order to score political points. They know they must create villains in order to position themselves as savior. Unfortunately, the statists are all too comfortable playing loose with facts if it means expanding their power.
If these folks were really concerned with “windfall” or “obscene” profits, they would allow for a more competitive market. Greater competition and fewer barriers to entry for new entrants is the greatest check on rising profits.