Health Inc.

As Consumer Group Slams Health Plans' Profits, Insurers Point Finger Elsewhere

The health care bill may now be the health care law, but the war against the health insurance industry is raging on unabated.

Apparently, consumer groups' strategy seems to be if they can demonize the insurance companies enough, they can redirect some of the unhappy feelings now being aimed at the still new Patient Protection and Affordable Care Act.

The health spending pie.

Insurers ask you to note how small the slice of the health cost pie is for their administrative expenses. AHIP hide caption

itoggle caption AHIP

The latest salvo comes from the group Health Care for America Now. It wants to make sure that while you and your employers might be struggling to pay your health insurance bills, the nation's five largest for-profit health insurance companies are doing very, very well indeed.

"The five insurers together set a full-year profit record in 2009 despite the worse economic downturn since the Great Depression," said the HCAN report. "Now, only a few months later, Wall Street analysts have been marveling at the first quarter of 2010."

The health insurance industry, which has been the brunt of attacks from the Obama administration as recently as last week, was quick to rebut the analysis.

Six of the 13 health insurance companies included in the Fortune 500 actually saw their profit margins decline between 2008 and 2009, according to a statement from America's Health Insurance Plans, the industry's trade group.

And besides, said AHIP, health insurers, at an average profit margin of 3.2 percent last year, don't clear nearly as much as, say, pharmaceutical companies, whose average profits were 24.23 percent, or even medical device makers, with a profit margin of 11.7 percent. Translation: why don't they pick on someone else for a change.

Reason: Because the insurance industry is such an easy target. Remember those huge premium increases WellPoint sought earlier this year in California? It turns out it was all a big math mistake, and WellPoint's 25 percent hikes should have been more like 15 percent instead.

Well, that's one way to try to boost profits.

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