In their quest to sell a government system, some politicians continue to mislead Americans about the role and impact of health insurance companies claiming excessive profits and greed.
It’s all bunk. As I have said many times, insurance company profits are insignificant in the scheme of health care costs and your premiums. In addition, most Americans are covered by a health plan that does not even use insurance.
I urge you to read the excerpt below and the full article as well.
You will also find that the conservative politician idea that price transparency and turning patients into cost conscious consumers will lower costs is bunk as well.
Excerpt from New York Time Opinion September 12, 2019
Four Key Things You Should Know About Health Care
Yes, it’s a complicated issue. But clarifying these fallacies will help voters understand it.
By Ezekiel J. Emanuel and Victor R. Fuchs
Mr. Emanuel is a vice provost at the University of Pennsylvania. Mr. Fuchs is an emeritus professor of economics at Stanford.
Fallacy No. 3: Insurance companies’ profits drive health care costs.
In the second Democratic presidential debate, Senator Bernie Sanders declared that the health care industry makes $100 billion in profits. He once railed against the insurance company Anthem for denying a claim while noting that it reported “fourth-quarter profits for 2017 had increased by 234 percent to $1.2 billion.”
Many Americans believe that profits have no place in health care. They see for-profit health insurance, like buying and selling kidneys and livers for transplantation, as what the Nobel Prize winner Alvin Roth termed a “repugnant industry” — something that should not be exchanged in the market.
That is an important moral stand, but it makes no difference to the claim that eliminating for-profit insurers will reduce high health care costs. The fact is, we could eliminate those profits and it would hardly matter to the cost of health care. You would not notice it in your premiums.
For the eight largest for-profit health insurance companies, in 2016, their cumulative revenue amounted to nearly $452.2 billion and profits were $22.1 billion, for a profit margin of about 5 percent. By contrast, technology companies, banks and major drug companies generally make more than 20 percent profit.
True, $22.1 billion is a lot of money — but it is 0.6 percent of health spending. And last year alone health care costs increased over $130 billion — six times insurance company profits. Health care spending would not be significantly cheaper if all insurance companies’ profits were zero.
There are far more savings to be had in other efforts — by cutting unnecessary patient services, for example, or by making physicians and hospitals more efficient — to deliver the same care at a lower cost.