Health Insurance Industry's Profit Margins Rank #86

Includes: AET, ANTM, CI
by: Mark J. Perry
Click to enlarge.

Private health insurance companies have come under attack lately for making profits, even "record profits," allegedly because of mergers, lack of competition, and monopoly power.

Health Care for America Now: Simply put, the private insurance companies have secured monopolies or tight oligopolies and exercised that power to put profits ahead of patients.

There were no actions taken against anticompetitive conduct by health insurers in the last administration, in spite of the fact that cases by state attorneys general have secured massive fines against these insurers. A lack of antitrust enforcement has enabled insurers to acquire dominant positions in almost every metropolitan market. Unfortunately, this toxic market structure has a profound effect on the nation’s ability to achieve the goals of health care reform.

President Obama: There have been reports just over the last couple of days of insurance companies making record profits, right now," Obama said during a prime-time news conference. At a time when everybody's getting hammered, they're making record profits, and premiums are going up. What's the constraint on that? ... Well, part of the way is to make sure that there's some competition out there.

As the table above of Profit Margins by Industry shows (click to enlarge, data here for the most recent quarter), the industry "Health Care Plans" ranks #86 by profit margin (profits/revenue) at 3.3%. Measured by profit margin, there are 85 industries more profitable than Health Care Plans (included Cigna (NYSE:CI), Aetna (NYSE:AET), WellPoint (WLP), HealthSpring (NYSE:HS), etc.).

And isn't one reason for a lack of competition that competition for health insurance across state lines is prohibited, creating in effect 50 state health insurance "cartels"?

Disclosure: No positions