Health insurance carrier profits seems to be an issue that is wildly misunderstood.
There is a big disconnect between the public and cost of health care. People do
not seem to understand that health insurance premiums are expensive because the
cost of health care is expensive and it is getting more expensive everyday (new
treatments, new medications coming to market, new technologies and our aging
population–just to name a few). Since many plans have copays ranging from
$20-$50 for doctor office visits (or Rx), people seem to think that equates to
the cost of the visit but that is not the case. The insurance carrier is paying
many multiples of the copay even after you have paid your “copay”. Since the
average insured consumer usually has little idea what health care costs, the
assumption is that because premiums are so expensive, the carriers must be wildly
According to Fortune Magazine in 2009, “Health Care: Insurance and Managed Care” ranked 35th
on the list of profitable industries (Top industries: Most profitable), and the
level of profit was only 2.2% margin. Note that is well behind “Pharmaceuticals”
(ranked 3rd at 19.3%), “Medical Products and Equipment” (ranked 4th at 16.3%)
even behind “Health Care: Medical Facilities” themselves (ranked 34th at 3.4%).
In the last year we have seen companies leave the market. Principal by has been the biggest
lost along with Unicare, American Community, & Humana pulling out of the
state of Indiana.