Reality of health insurance

Employee Benefits, Healthcare 8 comments

I was listening to a radio show, the topic was health insurance company profits. The reporter noted that following COVID there was a surge in delayed healthcare procedures thereby filling an insurance company’s coffers with profits.

Wrong!

Health insurance companies do not make money when you use health care. They make money by selling more policies with a profit from each policy sold representing the difference between the premium income and all claim payments and other expenses OR they act as a fixed fee claim administrator for large avemployer self-insured benefit plans and thus have no profit or loss risk for claims.

So, what do health insurance companies actually earn? Here are net profit margins for some major corporations in different industries.
Which one represents health insurance companies?

  • 3.8%
  • 3-5%
  • 25.48%
  • 13.58%
  • 10.0%
  • 15.53%

8 comments

  1. Pingback: Here is the answer on net profit margins – QUINNSCOMMENTARY

  2. I dunno, Google shows several articles like this one…
    “Second quarter earnings reports from major commercial health insurance companies tell a consistent story: increased operating income from decreased care utilization. UnitedHealth Group, CVS Health Care Benefits Segment, Anthem, and Humana all saw operating earnings over 200% of their 2019 Q2 amounts, much of which has been attributed to delays in routine care2–5 (Fig. ​(Fig.1).1). A fall in medical loss ratios (MLRs) supports this finding. MLR decreased between 6.9% to 13.7% across the 4 major payers.”

    Decreased utilization. I was scheduled for kidney removal in early 2020. Canceled due to Covid.

    https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7869966/

    Looks like the boon was temporary, though.

    There was a large mass in my right kidney. Filled about a third of the kidney. Never biopsied. They carefully never called it a tumor, never called it cancer, but said because of its size and position, it had to be removed. OK, after about a year, it spontaneously disappeared, and simultaneously several large cysts appeared on the outer edges, of the kidney, considered not dangerous. No explanation, still curious.

    Like

    Reply

    1. Mar 11, 2021

      “The Pandemic One Year In: Despite Large Profits in 2020, Health Insurers See Volatility Ahead”

      Companies could be hit with a double peak of claims for COVID-19 patients and care that people put off because of the pandemic.

      Like

      Reply

    2. I was just as confused when I Googled it too. The returned information was not clear when or what quarter that the information was from but it had an entry for “healthcare plans” gross profit 18.5%, net profit -8.6%. To me the -8.6% means the plans were paying out to settle claims during that period.

      I kind of need to know the source to compare apples.

      My guess on the 25% return is probably financial industry.

      Like

      Reply

Leave a reply to Jack Hannam Cancel reply