Massachusetts health insurers, under sustained pressure from small business customers and the Patrick administration to hold down premium increases, Wednesday posted sharply lower earnings for the second quarter compared with the same period a year ago.
Net income in the three months ending June 30 plunged 49.9 percent at the state’s largest health insurance company, Blue Cross Blue Shield of Massachusetts. The drop was even steeper for the state’s other major health plans — 56.3 percent at Harvard Pilgrim Health Care, 93.6 percent at Tufts Health Plan, and 68.4 percent at Fallon Community Health Plan.
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The rise in costs for insurers, by their own admission, is a product of boom and bust years. Their costs move in reverse to these tides of fortune. When there is a boom people can afford to have their problems looked after, but when times are bad they do not have the income to cover it. So they stay home and suffer needlessly. What is missing is a system that is not dependent on the economic cycle. Since everyone either needs health care or wants it at the ready believing it is a necessity this should end the question how it should be financed. We all must pay according to our incomes and providers must be compensated properly but not unevenly for the same services. By streamlining the payment system less administration is necessary to run the system and appropriate health care for all can be sustained through good and bad times.
Note that the insurance companies try to create competition by offering products that offer less coverage. That`s exactly what will happen if medicare is turned into a private system. Cheaper products will be rolled out and participants we be stuck with higher bills.
How does Cummings get away with calling insurance companies profit margin obscene? Pharmaceutical companies have a profit margin of 16.4 percent—seventh highest of the 215 industries that Morningstar tracks. Others segments of healthcare with margins well above the median include healthcare information (9.4 percent), home healthcare firms (8.5 percent), medical labs (8.2 percent), and generic drugmakers (6.5 percent). Overall, the profit margin for health insurance companies trends around 3.4 percent according to data provided by Morningstar. That's average at best. How long does this whole experiment have to go on before we dump this system and go to single payer?