News flash: health care costs so much because we consume so much, not because evil insurers are price-gouging:
Myth No. 1: Insurers' profits are responsible for our health care costs.This is the most pervasive and most crowd-pleasing of the health care myths. The profits of the big health insurance companies are central to the rhetoric of the health care debate, figuring heavily in the Democratic primary campaign. Barack Obama's platform includes a promise to force insurers to spend enough on care "instead of keeping exorbitant amounts for profits and administration." Michael Moore, the director of Sicko, has hammered the point repeatedly, thundering about how insurers maximize profits by "providing as little care as possible."
The problem here is that between them the five biggest health insurers—UnitedHealthCare, Wellpoint, Aetna, Humana, and Cigna—which cover 105 million members, last year had profits between them of $11.8 billion. This is not a small number; these are very profitable companies. But total U.S. health care costs last year were in the area of $2.3 trillion.
So, with a membership that included a little more than half of the Americans covered by private insurance, these five insurers' profits came to 0.5 percent of total health care costs. (One interesting point of comparison: In 2006, the income earned by the 50 biggest nonprofit hospitals alone came out at $4 billion.)


That seems like a fair analysis. The profits of five companies against the entirety of health care expenses for the U.S..
How about return on sales, or return on investment? And what about administrative overhead, which for most insurers comes to about 20% of premiums?
These are not trivial expenses. And the arguments for nationalized health care are only partly about cost.
Posted by Osama Von McIntyre | May 1, 2008 1:08 PM