As we watch the media during this current health care debate, we can see that health care reform activists and progressives are driving the debate with a recurring mantra: high-profit health insurance companies are evil. It’s a well-worn, yet still effective tactic, that of activists and NGOs painting the corporate ogre as a greedy, highly-profitable, money-grubbing villain in a drama sure to tantalize. For an example of this type of tactic, let’s take a look at a recent AFL-CIO blog post.
On October 7, 2009, the AFL-CIO Now Blog posted “Health Care Action: Union Activists Visit Congress, Deliver Letters from Consumers.” In the fifth paragraph of this blog post appears this phrase, “insurance companies that put their profits far, far above the people they are supposed to serve.” The AFL-CIO blog perpetuates and exploits the drama to which I referred above and in doing so via this phrase they express two opinions: 1) that health insurance company devotion to its customers is lousy; and, 2) that the insurance companies are overly profitable.
For another example of the tactic of painting a money-grubbing ogre, there is also this passage from The Progressive which in an article titled “Health Care Reform on the Homestretch” dated September 13, 2009 said “Kucinich begins hearings tomorrow in the domestic policy subcommittee entitled ‘Between You and Your Doctor: The Bureaucracy of Private Health Insurance’ with a witness list that includes the family members of patients denied needed care because the industry needs to maintain its high profit margins.” Again, here they are going for the tactic of painting the health insurance industry as money-grubbers with attention to sacrificing customer service in favor of a buck.
Well, I’m not going to tackle the customer service/attention issue. That one can vary company to company, and certainly service at many companies just plain stinks. But I will tackle the assertion by activists, NGOs, and progressives of a health insurance industry that is “highly” profitable. How will I tackle that? I’ll use some facts.
In Fortune Magazine’s list of the Global 500 appears a ranking of the 35 most profitable industries. In looking at the rankings for 2008, we see the following listing for return on revenues:
1. Mining, Crude-Oil Production 19.8%
2. Pharmaceuticals 19.1%
3. Tobacco 12.3%
Now, those are very good profitability numbers. I wouldn’t call them obscenely profitable, but I would call them very good.
But hold on. Where is the health insurance industry? Let’s continue farther down the list.
13. Beverages 4.2%
14. Health Care: Insurance and Managed Care 3.7%
15. Metals 3.7%
There it is. The health care insurance industry’s profitability is ranked #14 out of 35 industries ranked. I wouldn’t call that 3.7% wildly profitable. Even in this relatively stagnant stock market we now experience, the health insurance companies could just exit the market and stick their money in moderately aggressive investments and do at least as well. They could even stick their money in long-term CDs and do much better.
To see other industries that are much more profitable than health insurance (for example, “money grubbing, evil” industries like food products, household products, building materials, and shipping), click here to take a look at the Fortune Magazine industry rankings.
When activists and progressives characterize as “highly and unfairly profitable” an industry that makes only 3.7%, they just look silly. But to many folks the activists, NGOs, and progressives making these claims would not seem silly because many folks just don’t take the time to look at the facts. The folks rely instead on the media-fueled drama which pits David against the overwhelming Goliath. But just remember, Goliath wasn’t as overwhelming as he was cracked up to be.
Few things really are, unless of course they are being used in a political campaign.
Per a 
Any time a street is named as such, it makes me think of what a great society this is; that people are given the opportunity to make as much of themselves as is within their ability to do so. Yet, as I completed my drive down my local Market Street, I wondered that given all the shifts to the political left that we have recently seen within the United States (and indeed, more of these shifts have been experienced in some states more than in others), how long will it be until we see business district streets named “Commune Street” or “Social Good Avenue?”
Well, that’s not actually what the president is calling for. What he is calling for is an increase in volunteerism (and he’s not the first president to do that, by the way), not activism. Volunteerism and activism are two very different things. But her lead-off sentence does get one’s attention.
