Yahoo! News recently began a series of articles under the label of “FACT CHECK,” which presents itself as watchdog over politicians and their tricks. Often, these articles seem much more like opinion pieces in disguise. Take for example this article: “FACT CHECK: Health Insurer Profits Not So Fat.” Writer Calvin Woodward is essentially a cheerleader for big insurance, while he unknowingly makes a case for universal single payer health care.
Woodward’s singular statistical angle is percentage: profit margin, percent of revenue, profit growth and shareholder return are all discussed as percentages, not actual dollars. Woodward wants readers to sympathize with the poor health insurance industry. And if you go by his article alone, you may be inclined to do so.
Here are some other data for the health care insurance and managed care industry, which Woodward neglects to include (according to the Fortune 500):
- Ten year returns for shareholders rank number 5 on the best investment list at 10.3% (citation)
- The top seven insurance companies produced revenue greater than $11 billion last year (highest was UnitedHealth Group at a whopping $81 billion), with the lowest of the major companies making over $2 billion last year.
- All 14 major insurance companies posted revenue increases since the previous year, six of which were more than 20% increases (citation)
Looking at profits, the citation above shows some dismal numbers. For example, despite over $81 billion in revenue, UnitedHealth Group posted just shy of $3 billion in profit. This is a sure sign of inefficiency and unnecessary cost. Take the top company for another industry, computer software. Microsoft generated $60 billion dollars in revenue, almost $18 billion of which for profit. Maybe this is a sign that private health insurance doesn’t work. It certainly is not working for consumers. Even with astronomic revenues, top insurers can’t seem to maximize their own returns.
In the article, Woodward doesn’t give many specifics for shareholders, but they seem to do better than the companies themselves and the consumers. Overall, health care industry shareholders saw 11.1% return on their equity in the midst of a struggling economy (citation), while nearly 47 million Americans don’t have any insurance, small businesses wrestle with cost increases, and the legislators bicker about policies that seem woefully inadequate.
Photo Credit: Steve Rhodes – http://www.flickr.com/photos/ari/