sorry for the C/P, but this is interesting...

By CALVIN WOODWARD, Associated Press Writer Calvin Woodward, Associated Press Writer – 49 mins ago

WASHINGTON – Quick quiz: What do these enterprises have in common? Farm and construction machinery, Tupperware, the railroads, Hershey sweets, Yum food brands and Yahoo? Answer: They're all more profitable than the health insurance industry. In the health care debate, Democrats and their allies have gone after insurance companies as rapacious profiteers making "immoral" and "obscene" returns while "the bodies pile up."

Ledgers tell a different reality. Health insurance profit margins typically run about 6 percent, give or take a point or two. That's anemic compared with other forms of insurance and a broad array of industries, even some beleaguered ones.

Profits barely exceeded 2 percent of revenues in the latest annual measure. This partly explains why the credit ratings of some of the largest insurers were downgraded to negative from stable heading into this year, as investors were warned of a stagnant if not shrinking market for private plans.

Insurers are an expedient target for leaders who want a government-run plan in the marketplace. Such a public option would force private insurers to trim profits and restrain premiums to compete, the argument goes. This would "keep insurance companies honest," says President Barack Obama.

The debate is loaded with intimations that insurers are less than straight, when they are not flatly accused of malfeasance.

They may not have helped their case by commissioning a report that looked primarily at the elements of health care legislation that might drive consumer costs up while ignoring elements aimed at bringing costs down. Few in the debate seem interested in a true balance sheet.

But in pillorying insurers over profits, the critics are on shaky ground. A look at some claims, and the numbers:

THE CLAIMS

_"I'm very pleased that (Democratic leaders) will be talking, too, about the immoral profits being made by the insurance industry and how those profits have increased in the Bush years." House Speaker Nancy Pelosi, D-Calif., who also welcomed the attention being drawn to insurers' "obscene profits."

_"Keeping the status quo may be what the insurance industry wants their premiums have more than doubled in the last decade and their profits have skyrocketed." Maryland Rep. Chris Van Hollen, member of the Democratic leadership.

_"Health insurance companies are willing to let the bodies pile up as long as their profits are safe." A MoveOn.org ad.

THE NUMBERS:

Health insurers posted a 2.2 percent profit margin last year, placing them 35th on the Fortune 500 list of top industries. As is typical, other health sectors did much better — drugs and medical products and services were both in the top 10.

The railroads brought in a 12.6 percent profit margin. Leading the list: network and other communications equipment, at 20.4 percent.

HealthSpring, the best performer in the health insurance industry, posted 5.4 percent. That's a less profitable margin than was achieved by the makers of Tupperware, Clorox bleach and Molson and Coors beers.

The star among the health insurance companies did, however, nose out Jack in the Box restaurants, which only achieved a 4 percent margin.

UnitedHealth Group, reporting third quarter results last week, saw fortunes improve. It managed a 5 percent profit margin on an 8 percent growth in revenue.

Van Hollen is right that premiums have more than doubled in a decade, according to a Kaiser Family Foundation study that found a 131 percent increase.

But were the Bush years golden ones for health insurers?

Not judging by profit margins, profit growth or returns to shareholders. The industry's overall profits grew only 8.8 percent from 2003 to 2008, and its margins year to year, from 2005 forward, never cracked 8 percent.

The latest annual profit margins of a selection of products, services and industries: Tupperware Brands, 7.5 percent; Yahoo, 5.9 percent; Hershey, 6.1 percent; Clorox, 8.7 percent; Molson Coors Brewing, 8.1 percent; construction and farm machinery, 5 percent; Yum Brands (think KFC, Pizza Hut, Taco Bell), 8.5 percent.

___

Obama's plan is working. Growth = jobs.

Just wanted to say it before Hockey Dad did.

One of many reasons I hate insurance companies. Their credibility in the health care debate is actually sliding below that of the federal government's by some polls I've seen. That's a bit like trying to limbo under a stick that's already laying on the floor.

Two big reasons the insurance companies weren't seeing soaring profits:

1. Some big disasters hit some of them hard. Katrina ring a bell? When they weren't paying out, they were heading to court over lawsuits over denying claims.

2. Investments. Insurance companies make more money by investing the money they get from schmucks like you and I. Tech stocks bombed in the first part of the decade. Others started to slide as we hit a recession in late 2007. While insurance companies as a group tend to be fairly conservative, especially so in the past, a number of them (thank you, AIG) got into these idiotic whispers of ideas of exotic trading instruments, and when someone started to point out that the emperor had no clothes, that crap all started to implode.

It sure is nice that the insurance companies, who bitch about their losses when big disasters do hit, pay out promptly and fully with no hesitation, and then reduce our rates soon after making big profits, isn't it?

Well...maybe in a parallel universe or something. Meanwhile, these jokers make tons of money and my premiums for employee medical and dental jumped nearly 40% over 2008 rates. I would have asked for a little lube with that notice, but I was afraid of what THAT would have cost me.

But remember, the government is not trying to take over health care the insurance companies can still compete...

Well if they accept all preexisting conditions, profit controls, coverage regulations etc. Oh and at the same time the government plan will increase coverage and heat their offices by burning tax dollars.

Nationalize them all!

#5 There ya go, Pilgrim.

I do support the current state scheme of some rate control that has been around for years in Florida. I don't support limitations on profit, provided that the care the insurers are allowing (paying for) does not suffer. It is a trade-off that requires some state government regulation.

As to comparing the profitability of health insurers to other industries, it apples and oranges. Certain businesses have more risk than others and therefore have a different percentage of profitability. There are also economic factors, such as the economy, to consider.

Merely comparing 2% profit to X% in another industry will not lead to an economically rational conclusion. I would bet there are certain businesses/industries that kill for a profit of 2% of gross sales...

Must be rough for those poor companies being 35th on the fortune 500 list for percent of profit margin.

Did you ever stop to think that they are making a 2.2 percent profit margin on more revenue than the other companies listed combined.

How about you take a look at their total profits and compare those to Jack in the Box and the railroads.

By the way, United Healthcare's top exec, Bill McGuire, took in over a billion dollars in total compensation a couple years back. Let's compare his annual income to the total profit margin of aforementioned Jack in the Box.

Insurance companies make profit...

OUTRAGE!

Company #1

Return on equity 29.40%

Return on assets 13.90%

Return on investment 27.50%

Profit margin 3.70%

Company #2

Return on equity 22.50%

Return on assets 9.20%

Return on investment 16.80%

Profit margin 10.60%

Company #3

Return on equity 36.80%

Return on assets 18.70%

Return on investment 33.60%

Profit margin 24.90%

Which company should be put to death for excessive profits?

Trick question!

ALL OF THEM MUST BE PUT TO DEATH!!!!

Any profits must be erased. Obama will provide for all of us.

SING PRAISES TO DEAR LEADER!!!!!!

mmmm mmmm mmmm....

So now I read this morning that Barney Frank...see below:

------------------------------------

New bill to make seizure of US companies easier: report

WASHINGTON (AFP) – A bill to be introduced in Congress by a key ally of President Barack Obama would make it easier for the US government to seize control of troubled financial institutions that are considered too big to be allowed to fail, The New York Times reported.

Citing a senior administration official, the newspaper said the measure would be proposed this week by Representative Barney Frank, chairman of the House Financial Services Committee, after extensive consultations with Treasury Department officials.

The legislation would make it easier for the government to throw out the financial company's management, wipe out the shareholders and change the terms of existing loans held by the institution, the report said.

Treasury Secretary Timothy Geithner was planning to endorse the changes in testimony before the House Financial Services Committee on Thursday, the paper noted.

The White House plan as outlined so far would make the existence of a large financial company whose failure would put the US financial system and the economy at risk much costlier, the report said.

It would force such institutions to hold more money in reserve and make it harder for them to borrow too heavily against their assets, The Times said.

Setting up the equivalent of living wills for corporations, the plan would also require that companies come up with their own procedure to be disentangled in the event of a crisis, the paper said.

This plan, according to administration officials, ought to be made public in advance, said The Times.

"These changes will impose market discipline on the largest and most interconnected companies," the paper quotes Michael Barr, assistant treasury secretary for financial institutions, as saying.

One of the biggest changes the plan would make, he said, is that instead of being controlled by creditors, the process will be controlled by the government.

Some regulators and economists in recent weeks have suggested that the administration?s plan does not go far enough, The Times noted. They say that the government should consider breaking up the biggest banks and investment firms long before they fail, or at least impose strict limits on their trading activities -- steps that the administration continues to reject.

The article is about "troubled financial institutions" too big to allow to fail with out potential major impact on the U.S. economy. It would require increased retention of increased reserves by financial institutions and would allow the wipe out of shareholder equity and change loan terms. The article itself doesn't make the proposal sound much different than what the Fed can do with/to a bank overnight, should the Fed feel the need to. Wiping out shareholder equity and jettisoning management are ordinary events when financial (and other isntitutions) fail. Granted that the artcile is not of great detail, this reads like a streamlined process equivalent to both a Fed takeover and a bankruptcy. Nothing to panic about in my mind-sa of yet.