FACT CHECK: What They Are Saying About Health Plan Profits
Posted by The Campaign on March 08, 2010 at 7:39 AM
Independent experts and economists all agree -- health plan profits are not driving health care costs or premiums higher. Here are what some of the experts are saying:
Alwyn Cassil, Center for Studying Health System Change:
“‘…this idea that (taking) this $12 billion that they have in profits … would fix our health-care spending problems is just a pipe dream.’” (Louisville Courier-Journal, Health insurers defend profits, 02/21/10)
Henry Aaron, Senior Fellow, Brookings Institution:
“‘Insurance company profits in the large picture have very little to do with the overall rising cost of health care,’ said health care expert Henry Aaron, a senior fellow at the Brookings Institution.” (ABC News, Health Insurance Profits: Not So Outrageous After All?, 11/10/09)
Kaiser Health News:
“With the nation’s health care spending estimated at $2.5 trillion this year, even the elimination of insurers’ profits and executive compensation would lower health care spending by just 0.5 percent.” (Kaiser Health News, Ad Audit: What If?, 06/19/09)
Jeff Jacoby, The Boston Globe:
“To such overheated agitprop, the only useful response is a cold shower of facts, and the Associated Press supplied a timely one last week. For all the impassioned talk about obscene profits and bodies piling up, reports AP’s Calvin Woodward, ‘health insurance profit margins typically run about 6 percent’ of revenue, a return ‘that’s anemic compared with other forms of insurance and a broad array of industries.’” (The Boston Globe, Jeff Jacoby, Hyperbole in the health debate, 11/01/09)
Rick Newman, U.S. News & World Report:
“...on the whole, blaming insurance firms for runaway healthcare costs is a weak argument, because the insurance industry isn’t all that profitable to start with.” (U.S. News & World Report, Why Health Insurers Make Lousy Villains, 08/25/09)
Steve Pearlstein, The Washington Post:
““Health insurance companies aren’t ridiculously profitable over time.” (The Washington Post, Weekly Q & A, 10/28/09)
Associated Press:
“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.” (Associated Press, FACT CHECK: Health insurer profits not so fat, 10/25/09)
Dr. Peter Kongstvedt, Economics Professor, George Mason University:
“Insurance companies are not the major drivers of cost inflation.” (CBS News)
Ezra Klein, The Washington Post:
“...it’s hard to see how [health plan profit margins of 3.3%] are a primary driver of health-care spending, much less the growth in health-care spending.” (The Washington Post, Ezra Klein, Profits and the Insurance Industry, 09/10/09)
Rick Newman, U.S. News & World Report:
“Some reformers want health insurers to simply hand over a chunk of their profits to help lower premiums and overall healthcare costs. The Senate Finance Committee bill, for instance, would levy a $6.7 billion annual fee on insurers to help pay for reform, in addition to fees on drugmakers and device manufacturers. But insurance companies aren’t the cash cows some imagine them to be. The profit margin for health insurance companies over the past year was 3.4 percent, according to the research firm Morningstar. That’s better than the median of 2.2 percent, but it ranks only 87th out of 215 industries. Drugmakers, by contrast, have a profit margin of 16.4 percent.” (US News & World Report, Why More Competition Won’t Fix Healthcare, 10/29/09)
The New York Times:
“The president said that health insurance companies were making ‘record profits.’ America’s Health Insurance Plans, the main lobby for insurers, contends that ‘for every $1 spent on health care in America, approximately one penny goes to health plans’ profits.’” (The New York Times, Experts Dispute Some Points in Health Talk, 07/23/09)
Les Funtleyder, Health Care Analyst:
“‘2008 was a terrible year. So the comparisons, while numerically correct, leave out a bit of context.’ Health care analyst Les Funtleyder at Miller Tabak says millions of people lost coverage last year because they lost their jobs, not because insurers purged their rolls.” (Marketplace, Insurer profits rise while coverage falls, 02/12/10)
Bill Frezza:
“If you took all the profits that all the health insurance companies made in 2009 and used them to pay for medical care in 2010 you would cover the country's medical bills for ... two days. Then what?” (RealClearPolitics.com, Why Washington Can't Reform Healthcare, 02/15/10)
