Monday, October 11, 2010

Un-Insurance Reform

Who doesn't need insurance reform? Why the insurers like Aetna, Cigna and BCS Insurance!
By threatening to raise health care premiums by 200 percent or threatening to drop coverage altogether, the companies got the Department of Health and Human Services to cave. Now the companies have our government’s blessing to continue offering “insurance” to their employees that is capped at a few thousand dollars per year instead of the $750,000 required in the health care law.
Perhaps Gruntdoc said it best:
"I am not an Obamacare fan, and would like it repealed, with smaller, more focused Bipartisan fixes, but if the government is going to pass something then roll over this easily to special interests… it’s already worse than useless."


Lynda Halliger Otvos (Lynda M O) said...

As a chronic pain patient since an accident in 1975, I have gone decades without "insurance". All I really want is Care, not coverage or insurance or access...

CARE, get it? Pretty straightforward, why can't the people running this country see that? Oh yeah, cuz they have insurance.

Andrew_M_Garland said...

Cigna's 3Q Profit Grows 92%
[edited and explained]
For July-Aug-Sept 2009, Cigna earned $329 million compared to $171 million in those three months in 2008. Revenue fell -8% to $4.5 billion.

The $329 million is an overall profit margin of 7.3% ( $329 / $4,500 ). That is, they collected $4,500 million in premiums (and some other activities) during those three months, and retained $329 million in profit after administrative expenses and paying for subscribers medical costs.

This was 114% more ( my calculation) than the 3.4% Cigna earned in Q3 (the third quarter-year) of 2008, but below the double-digit profit percentages seen in other industries. The insurer's profit margin in its health care segment was 6.3%, which includes employer-sponsored group health insurance.

Here is another view of a 6.3% profit margin. Say a subscriber pays $12,000 per year for Cigna health insurance. Then $756 of that was retained by Cigna in 2009 as profit, after expenses and payouts. In 2008 they retained $408 (3.4%) as profit. That is what was paid to the shareholders of Cigna stock, the people who own the buildings and knowledge that allows Cigna to operate, and who take a risk that Cigna will continue to operate profitably under the whims of government.


Andrew_M_Garland said...

(continued from above)

I don't know if Cigna is frugal or wasteful in their expenses, and only competition can reveal if they could operate well on earnings of less than 7.3% of revenue (premiums collected and amount charged for services). Most businesses earn more profit on their revenues.

That $756 is a reasonable figure to evaluate this question: Is Cigna making out like a bandit, or responding to the costs imposed by government mandates within ObamaCare? If they earned no profit they would soon be broke and out of business. Even so, premiums could only be 7.3% lower before that happened. I conclude that they are responding to their estimates of increased cost.

Say that we don't like the influence that a large insurance company can have on our politicians (the government). The solution is less government involvement and more competition among insurers.

Why continue detailed involvement by politicians when we don't trust the politicians? The idea of having the government directly run the insurance business seems even more perverse to me, and more subject to waste, fraud, abuse, favoritism, and manipulation.

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