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There has been a lot of discussion about the recent published profits of health insurance companies, both in raw dollars and as a per cent margin. I don't think either of these statistics are important. Non-profit organizations, such as the Red Cross, show zero profit, but can pay their executives bloated compensation packages and/or present high overhead limiting the resources directed at their primary missions.
I think of insurance companies as similar to non-profits. I don't really care if they profit or not except that the margin subtracts what is paid out in medical support for their customers. The important figure is the percentage of their premium income that is paid out as benefits to their subscribers. They fare poorly as compared to Medicare in this regard.
To make a profit, to the extent possible, they (1) insure people who never get sick; (2) deny benefits against claims; (3) exercise recission or skyrocketing premiums against subscribers for whom they actually pay out claims; and (4) apply larger and larger annual deductibles.
posted 3 years, 2 months ago
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