A question about health insurance costs?

Question

I have a question for anyone who thinks the public option will save us so much money on health insurance because it will take the profit out of the system.

If a health insurance company only turns about 6% in actual profit this will only save 6% off the cost of health care. And CEO pay averages much less than 1% of costs so this saves nothing.

How will taking the profit out of the system save any real amount from the cost of health insurance? If you pay $500 a month now you will pay $465 with no company profit, and that is assuming the government runs as efficiently as the private companies, which they do not.

What we have in this country is a crisis in health care costs, health insurance costs so much because our health care is so expensive, not the other way around.

My question basically is how can a public option lower the cost or health insurance while health care costs so much, either we will have to pay other taxes into the system to prop it up and keep premiums low or the benefits will have to be limited.

And for anyone who points to Medicare for keeping prices down, what happens is they limit payments to doctors and hospitals which causes them to have to make it up on the other payees which raises the cost of everyone else' health care.

Answer 1

My understanding is that the cost of insurance, when you add up their marketing, administration, CEO compensation, profits to stockholders, AND the cost to doctors' offices who commonly hire one or two people full-time to handle insurance claims... this consumes about 30% of insurance premiums.



I don't have a source off-hand for my 30% figure (just as you don't for your 6% figure), but 30% is roughly the numbers I was hearing when pundits we're debating the issue with their guests a month or two ago.



Thomas, goverment costs would be lower because they won't incur any of the costs I listed above except for payment disbursement costs, which would be minimal (they will likely be done by computer using ACH electronic fund transfers) and some administration costs. There won't be any profits. The public option will function much like the post office competing with Fedex and UPS in shipping packages. And that has proven to work. (As has national health care in many countries, particularly France's system.)



Thomas, I checked your source and wasn't satisfied because it's just a table with no reference to the source the table. However I did find a reputable list at http://money.cnn.com/magazines/fortune/fortune500/2008/performers/industries/profits/ and it indeed shows a profit margin of about 6% for health insurance. That 6% would be saved by a government plan. But the government would also save the costs of advertising and other business expenses. Remember, the 6% profit is the money left over after all expenses have been paid.



Thomas, people have been saying that the post office has been going bankrupt for at least the last twenty years. That's the reason they keep raising the price of the stamp, to prevent bankruptcy. Though I will concede that, with the volume of mail dropping due to internet communications, the post office's monopoly on regular mail is making less and less sense.

Answer 2

This is a valid question and one I have mentioned before.



Stripping 100% of the profits from insurance companies would make no significant difference in total health care costs.



But Obama knows that he can't sell the plan without a villain, and he thinks that most people won't dig into the facts.



So, the gullible go along and blame insurance companies for costs.

Answer 3

A few places money could be saved would be by getting rid of the lobbyists; currently, there are SIX lobbyists and nearly half a million dollars PER congressman - that's a LOAD of money that coming from our health care dollar that is TOTALLY WASTED money, completely misappropriated funds. It adds up to $1.4 MILLION dollars a DAY.



Another, would be marketing, which is 18% of what is paid to the health insurance corporations. There would be no need for this, another wasted, misappropriated dollar that is taken in by the health insurance corporation that SHOULD be spent on actual health care.



Another would be corporate salaries, perks and bonuses. C.E.O.’s at the big health-care companies make two-thirds more than their counterparts in finance and are the highest paid of ANY industry.With median annual compensation of more than $12 million; a heart surgeon makes LESS than 5% of what the CEO of a health care insurance corporation makes - WHAT are our priorities?



Cutting down/out fraud would be another source of income - labs are currently charging $8.59 for simple blood-count tests while billing other clients $1.43 for the same test. The same corporations that are crying about their profits NOW, have already been fined, record fines of $1.7 BILLION dollars for Medicare fraud. We lose $280.00 per wage-earner a year on FRAUD.

That would be Rick Scott, who now instigates PAC's to lobby and incites the "protesters" against "socialism" otherwise known as health care reform.



Then there is allowing us to use competitive (capitalism!) pricing for drugs, there is currently an America corporation that sells Canada prescription meds at a fraction of what they charge US for them, however, they have lobbied OUR congress to outlaw competitive bidding for the same meds and we can't even re-import those same drugs made in America from Canada at a lower price.



What gives with these no-bid, cost plus contracts we keep giving out in this "capitalist" country?



Then there's the "Health-Care Real-Estate Investment Trusts" - huh?

WHAT does real estate have to do with health care? Well, there are the aging baby-boomers that will need these "nursing homes" - they make a 40% profit margin. Yes, we do need these, but a 40% profit taken from our health care dollar?



"Our health-care system is a casino-haven for ambitious M.B.A.’s, Wall Street brokerages, middlemen, and bottom-feeders looking for easy money" (Vanity Fair) - what you don't see on this list is Doctors, surgeons, nurses etc.... EVERYONE seems to be making money off of this system EXCEPT those it is SUPPOSED to serve. Those in the business of actually GIVING health care and those that are SUPPOSED to be RECEIVING it.



As things stand now, $1.5 MILLION families lose their homes to foreclosure every year, due the medical bills, 80% of them HAD insurance.

The Congressional Budget office estimates that WITHOUT reform, an average family of four will pay $25,000 per year in heath insurance premiums.



We HAVE to stop the GREED, get the dirty hands that have no real purpose in our heath care pocket OUT of it.

There ARE ways to make this happen, and to make it happen affordable. The current system is rife with fraud, misappropriated money AND priorities as well as disinformation.

Answer 4

and who picks the cost for the uninsured now you missed all of those cost didn't you. its not just the Insurance company's its the drug makers the Hospitals that pass the ER cost along to everyone else

Answer 5

We need a public option that takes care of cancer, stroke and heart disease. The rest of health care isn't minor costs but affordable for most people.

Answer 6

600-1600 dollars a monthper person and you believe they only make 5% profit

Answer 7

Now add in what you will pay extra for those who don't pay as much or none at all!

Answer 8

I think your percentages are off by a lot.