No, the insurance industry does not make 4-5% profit, but more on that in a moment.
The important thing is administrative costs. The amount of money taken out of every dollar the subscriber pays into the plan. Medicare takes about 5%. Private insurance companies take anywhere between 23% to 30% (and it's can be as high as 39%).
Either the private insurance companies are grossly inefficient or they're extremely profitable for the people who run them. Net profit, after all, is what's left after all the bloated salaries of the upper management team is taken out.
What's wrong with that is that CEOs are making 400-500 times as much as the line workers and they're not doing it because they're incredibly savvy, efficient, inspiring leaders; they're doing it because they run in a rarified circle of like-minded people that mutually justify their obscene compensation packages.
Single payer is the only solution to ever-spiraling healthcare costs. There's one other element to this, which is that the government needs to be freed of the restrictions preventing it from bargaining with Big PhRma about drug costs. Neither will happen under Obama, Democrats or Republicans.
Profit is defined many different ways, and how corporations define profit can be quite imaginative.
Do you remember Jim Garner's battle with Universal over his profits from The Rockford Files. The Rockford Files was one of the studios most successful television series and most lucrative syndicated series of that time, yet Garner never saw a dime due to Universal's creative bookkeeping and their original deal with Garner (profits from the net instead of the gross). On paper, The Rockford Files never made it into the black, but in actuality, Universal skimmed profits by paying itself over and over again by recharging the Rockford Files' production company for items already bought and paid for.
Kaiser-Permanente might be considered an good example of what I'm talking about here. Subscribers pay to receive medical treatment and KP takes the money and uses it (in addition to treating the subscriber) to invest in things like real estate, property, building medical facilities, etc. That becomes a tangible asset that doesn't belong to the subscriber but to KP's 'partners' - Every physician who works at KP (provided they get past a 2 year probationary period) is offered a partnership, and once they're partners they get year-end bonuses that are mainly based on the company's performance that year. Thus, subscribers/patients are putting the money up and they're not reaping the whole benefit of their money, just as insured patients are putting up their money which insurance companies then take and invest in medically-related companies and reap obscene profits, creatively cook the books while limiting treatment to the subscribers.
KEEP READING
Read the Article at HuffingtonPost
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