Tuesday, October 27, 2009

A Number We Never See

With all the finger-pointing in D.C. about the evil health insurance companies and their inhuman profits, what actually ARE their profits? Check out these numbers, courtesy of Villainous Company.com:

The President's characterization of insurance profits rated a "FALSE" on Politifact's Truth-o-meter. In fact, the insurance industry ranks 86th in profits - hardly obscene by any measure:

As I reported several months ago the industry "Health Care Plans" (includes Humana, Aetna, WellPoint, Magellan, etc.) ranks #86 by profit margin at only 3.3% (see table above, data here for the most recent quarter), not exactly strong evidence of "excessive profits" or monopoly power. Four health insurance companies (Molina, Health Net, Coventry, and Universal American) have profit margins below 1% for the most recent quarter, and another four (Humana, Magellan, WellCare and Centene) have profit margins between 1 and 2 percent (data here).

America's Health Insurance Plan, the industry's trade association, recently reported that annual health insurance premiums averaged $2,985 for individual coverage and $6,328 for family plans in 2009. Using the industry average profit margin of 3.3% means that insurance companies make less than $100 per policy in profits for individual coverage, and a little more than $200 in profits for each family policy. Doesn't seem too "excessive" or an indication of monopoly power, does it?

I wonder why we never see THAT number in the press?

Here's another invisible number for your amusement. We have a czar (a word that means the same as dictator, for crying out loud!!) who is telling private companies how much they can pay employees, especially the big exec's. While that is going on, the gov't run Freddie Mac hires a new exec. Does he bite the bullet in salaries? (this from Businessweek.com)

The pay package given to Freddie Mac's new chief financial officer should have sent a message from Washington to corporate America about how executive compensation standards must change. Instead, it did just the opposite.

The government-controlled mortgage finance company is giving CFO Ross Kari compensation worth as much as $5.5 million. That includes an almost $2 million cash signing bonus and a generous salary that could top $2.3 million.

The Federal Housing Finance Agency, which oversees Freddie Mac, approved the pay package. A spokeswoman pointed to a statement that justified the agency's approval of the pay, which was done in part because the amount was comparable to what others in the financial services industry make.

That way of thinking is exactly what helped feed the surge in executive pay over the last decade. Everyone wants to make at least as much, or more, than their peers.

Freddie Mac is not just another company. It's alive today, and nearly 80 percent owned by the government, only because almost $51 billion in taxpayer funds were pumped into it over the last year. More bailout money also may be needed in the quarters ahead as losses from its troubled mortgages mount.

What a silly notion that government should follow the rules it imposes on the low-life slobs who must pay the bills!

1 comment:

Jeremiah said...

Funny how that never made the news