Don't believe everything you read. We hear that all the time. But how many of us still heed that childhood maxim? Always crosses my mind whenever I hear politicians attacking those "evil" insurance companies. First of all, pot meet kettle. Yeah, you're both black.
But more importantly, it's simply not true. This is a classic case of a good headline getting in the way of the facts. At least twice during this rancorous health care reform debate, House Speaker Nancy Pelosi never one to shy away from moral indignation or even blustering outrage referred to the insurance companies and their "immoral" and "obscene" profits.
(And, honestly, since I chastised the right a few months ago for some of their more fanciful charges against the Democrats, I figured it was only fair I take on the craziest conspiracy circulating among the left.)
So, about those bulging carrier profit margins - they're about as thick as Ralph Lauren models. According to a late October Associated Press report, health insurers actually posted a meager 2.2 percent profit last year, a performance that landed them 35th on the Fortune 500 list of industries. Now, that's not to say that everybody struggled. Drug makers, and medical products and services both managed to land in Fortune's top 10.
For the sake of comparison, railroads - those nostalgic relics from a bygone era - steamed through 2008 with a 12.8 percent profit. And I don't hear anyone taking shots at Thomas the Tank Engine. Seriously, though, those numbers hardly warrant federal investigations or even press conferences. In fact, as the AP story points out, the industry's best performer, Nashville-based HealthSpring, posted a 5.4 percent profit, trailing Tupperware and Clorox. A little perspective and truth goes a long way. The carriers might be guilty of their share of sins, but making immoral amounts of money certainly isn't one of them.
