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Figures lie and liars, well, you know. Liars in the health insurance industry are going to plenty of trouble to disseminate their latest lying figures. The Post-Dispatch printed them a week ago Monday, in an AP news article.

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.

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 revenue 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.

Then on Thursday, the P-D gave an insurance industry spokeshole space on the op-ed page to reiterate that line:

Health insurers’ profits are 3 percent to 5 percent. The average profit margin for Standard & Poor’s 500 is 12 percent.

Chances are good that the AP story quoted above also appeared in the KC Star, not to mention the Washington Post, the New York Times, the Chicago Sun Times, the Dallas Herald, the Los Angeles Times and …..

Before you shed any tears for the way that WellPoint and UnitedHealth have been vilified for excessive profits, consider a study released by HCAN (Health Care for America Now) late last May, which begs to differ with the insurance company line:

Profits at 10 of the country’s largest publicly traded health insurance companies rose 428 percent from 2000 to 2007, while consumers paid more for less coverage. One of the major reasons, according to a new study, is the growing lack of competition in the private health insurance industry that has led to near monopoly conditions in many markets.


In the past 13 years, more than 400 corporate mergers have involved health insurers, and a small number of companies now dominate local markets but haven’t delivered on promises of increased efficiency. According to the American Medical Association, 94 percent of insurance markets in the United States are now highly concentrated, and insurers are thriving in the anti-competitive marketplace, raking in enormous profits and paying out huge CEO salaries.

Of course, we shouldn’t let our wish for affordable health care make villains where they don’t exist. How can we be sure that the HCAN report is more reliable than the info the Post-Dispatch is helping health insurers disseminate? For starters, AHIP (America’s Health Insurance Plans) has been zig zagging between various untruths and misrepresentations so regularly that AHIP President and CEO, Karen Ignagi, thinks a zig zag is the shortest distance between two points.

A story by Joanne Silberner at NPR explains this specific misrepresentation:

Insurers are measuring their profits against total health care spending. That’s all the money you and I and employers and insurers and the government spend for doctors’ visits, hospitalizations, drugs and other things.

By using the total health care costs, their profits look lower.

All this is not to say that insurance company profits are the only driving force in rising health care costs. But when you know that AHIP is lying to you, you get understandably cynical about any of their pretended promises to cooperate.