But, how bad are those insurance companies? Are they simply ripping off all of America on the with their high insurance fees for health care so that they can make excessive profits?
Well, to answer that, let's look at the health care insurers and their profit margins. The profit margin is the percentage of profits that a company makes after all expenses and taxes are applied to its revenues.
Now, it is true that most health care insurers do make money. In fact, they are somewhat recession-proof. But, in general, these companies only have profit margins of about 2-1/2 to just under 5 percent.
So, now, let's look at the very biggest of the health insurance industry.
Humana will have a scant profit margin of 2.79% this year and has had a 9-year average profit margin of only 1.92%. Similarly, Cigna is at about 3.02% for 2009 with an average of 4.73% over the last 9 years. Aetna is at 3.85% with a 9-year average of 4.01%. Wellpoint has numbers of 4.07% and 4.39%; respectively.
Note: All these statistics (above and below) were obtained from either Yahoo Finance or from Standard & Poors Stock Reports.
To put those profit margins into perspective, let's look at the current-year and 9-year profit margins for some other companies that aren't in the business of medical insurance.
- In the case of Apple Computer, they have a current profit margin of 14.88% (in midst of a recession) and a 9-year of 7.12% (Note: a decade ago, before the IPod, Apple was really struggling which accounts for its lower average profit margin).
- Microsoft is struggling this year with a profit margin of 24.9%. In the past 9 years, it has averaged 28.3%.
- Caterpillar at 6.93% this year with a 9-year of 6.21%.
- Exxon-Mobil is at 9.47% and 8.45% for a 9-year.
- General Electric is 9.91% and has had a 9-year average of 11.42%.
- And, finally, Johnson & Johnson, a health care provider, has a 20.31% profit margin for this year and a 9-year of 18.44%.
In general, most companies, when they are making money and are not in a recession, have profit margins that are at least double that of the health insurers. To denigrate them as evil profiteers is just ridiculous and it shows how out of touch Obama is with reality.
Let's not forget that in order to make profits and be competitive, insurance companies must keep expenses to a minimum; something that the all the government controlled and losing efforts of Medicare, Medicaid, Social Security, and the Post Office haven't got a clue about.
Also, these companies, by making profits, pay state and federal income taxes. That is something that can't be said about a company like General Motors who has received billions of dollars in bailouts and who hasn't paid taxes for years.
Further, the health insurance companies provide thousands of jobs with employees who, in turn, also pay taxes.
What Obama doesn't seem to understand is that it is only companies that make money who are able to pay income taxes. If we had a whole country of bankrupt and General Motors-like companies who don't pay any taxes, there would literally be no Federal Government for the lack of tax revenues. Uncle Sam would be totally broke. What then?
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