1) Over 40% of healthcare providers today are non-profit.
(Source: Non-profit Healthcare)
2) Health care providers cannot transfer policies across states due to government legislation.(Source: WSJ)
3) Health care insurance companies make profit margins of 3.3%
(Source: Seeking Alpha)
Why aren't the Tea Parties talking about these things? Instead they are intent on regurgitating annoying Glenn Beck. Anyway, these three facts tell us 3 important things.
1) The additional promotion of more non-profit cooperatives won't really improve competition by driving down costs. Non-profits already own a significant portion of the market share. Why?
Medicare pays on average 10% below the cost of the actual service. Since the hospital has to get that money somewhere to avoid going bankrupt, prices go up for those with private insurance.
Secondly, Americans are really unhealthy, and our obesity and overweight numbers are rising.
2) Government legislation that restricts insurance companies from working between states should end, otherwise we will continue to have 50 health care cartels that own their own inefficient monopolies. If Obama wants to encourage competition, let the insurance companies compete nationally. And btw-- the cross-state restriction is a leftist policy made by states who want to mandate lower costs.
3) At such a low profit margin, the industry really isn't making that much. For every $1.03 of service they provide, they get 3 pennies after all business expenses are paid.
Saturday, October 17, 2009
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2 comments:
I think the argument against point #3 is that the value of that $1.03 of service provided isn't up to snuff. Now, value is a subjective term, that's understandable, and although taking home 3 pennies of that $1.03 doesn't seem very much, when the revenue from Aetna for Q2 2009 is $8.67 BILLION, there seems to be a disconnect there. They've brought in more revenue (up 11% from Q2 2008), yet profits are down, and service output is not comparable to the rest of the world according to the WHO.
Isn't that what part of the reform is supposed to address? Ok, they're not making very much profit, percentage-wise, but dollar-wise, there's already a crap load of money already on the table. The solution isn't obvious, but if you're not making a profit on a revenue of $8.67B, the cost of service is too high, and it's time to get out of the business, imo.
Sounds like a bunch of hooey, but still, that's a LOT of zeroes on the table.
http://finance.yahoo.com/q/is?s=AET
Honestly, you can't just point to a revenue figure and say, look they made 8.67b in the first quarter of 2009. You gotta take off expenses such as paying employees, office rent, heating blah blah. So when you take off the 8.0b dollars that they pay out in expenses, their profit margin isn't that pretty. They make 67m and they still gotta pay taxes on that.
It's like me saying, I made $10,000 in home sales, without accounting for the fact that I had to also pay (say) $5,000 in business expenses.
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