Monday, October 26, 2009

FACT CHECK: Health insurer profits not so fat

http://apnews.myway.com/article/20091025/D9BI4D6O1.html

FACT CHECK: Health insurer profits not so fat

Oct 25, 8:37 AM (ET)

By CALVIN WOODWARD

WASHINGTON (AP) - 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. In the health care debate, Democrats and their allies have gone after insurance companies as rapacious profiteers making "immoral" and "obscene" returns while "the bodies pile up."

Ledgers tell a different reality. 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 revenues 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.
I
nsurers are an expedient target for leaders who want a government-run plan in the marketplace. Such a public option would force private insurers to trim profits and restrain premiums to compete, the argument goes. This would "keep insurance companies honest," says President Barack Obama.

The debate is loaded with intimations that insurers are less than straight, when they are not flatly accused of malfeasance.

They may not have helped their case by commissioning a report that looked primarily at the elements of health care legislation that might drive consumer costs up while ignoring elements aimed at bringing costs down. Few in the debate seem interested in a true balance sheet.

But in pillorying insurers over profits, the critics are on shaky ground. A look at some claims, and the numbers:


THE CLAIMS

_"I'm very pleased that (Democratic leaders) will be talking, too, about the immoral profits being made by the insurance industry and how those profits have increased in the Bush years." House Speaker Nancy Pelosi, D-Calif., who also welcomed the attention being drawn to insurers'"obscene profits."

_"Keeping the status quo may be what the insurance industry wants their premiums have more than doubled in the last decade and their profits have skyrocketed." Maryland Rep. Chris Van Hollen, member of the Democratic leadership.

_"Health insurance companies are willing to let the bodies pile up as long as their profits are safe." A MoveOn.org ad.


THE NUMBERS:

Health insurers posted a 2.2 percent profit margin last year, placing them 35th on the Fortune 500 list of top industries. As is typical, other health sectors did much better - drugs and medical products and services were both in the top 10.

The railroads brought in a 12.6 percent profit margin. Leading the list: network and other communications equipment, at 20.4 percent.

HealthSpring, the best performer in the health insurance industry, posted 5.4 percent. That's a less profitable margin than was achieved by the makers of Tupperware, Clorox bleach and Molson and Coors beers.

The star among the health insurance companies did, however, nose out Jack in the Box restaurants, which only achieved a 4 percent margin.

UnitedHealth Group, reporting third quarter results last week, saw fortunes improve. It managed a 5 percent profit margin on an 8 percent growth in revenue.

Van Hollen is right that premiums have more than doubled in a decade, according to a Kaiser Family Foundation study that found a 131 percent increase.

But were the Bush years golden ones for health insurers?

Not judging by profit margins, profit growth or returns to shareholders. The industry's overall profits grew only 8.8 percent from 2003 to 2008, and its margins year to year, from 2005 forward, never cracked 8 percent.

The latest annual profit margins of a selection of products, services and industries: Tupperware Brands, 7.5 percent; Yahoo, 5.9 percent; Hershey, 6.1 percent; Clorox, 8.7 percent; Molson Coors Brewing, 8.1 percent; construction and farm machinery, 5 percent; Yum Brands (think KFC, Pizza Hut, Taco Bell), 8.5 percent.
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Associated Press writer Tom Murphy in Indianapolis contributed to this report.

Conservatives Maintain Edge as Top Ideological Group

http://www.gallup.com/poll/123854/Conservatives-Maintain-Edge-Top-Ideological-Group.aspx#

Compared with 2008, more Americans “conservative” in general, and on issues

by Lydia Saad

PRINCETON, NJ -- Conservatives continue to outnumber moderates and liberals in the American populace in 2009, confirming a finding that Gallup first noted in June. Forty percent of Americans describe their political views as conservative, 36% as moderate, and 20% as liberal. This marks a shift from 2005 through 2008, when moderates were tied with conservatives as the most prevalent group.

The 2009 data are based on 16 separate Gallup surveys conducted from January through September, encompassing more than 5,000 national adults per quarter. Conservatives have been the dominant ideological group each quarter, with between 39% and 41% of Americans identifying themselves as either "very conservative" or "conservative." Between 35% and 37% of Americans call themselves "moderate," while the percentage calling themselves "very liberal" or "liberal" has consistently registered between 20% and 21% -- making liberals the smallest of the three groups.

Independents Inch to the Right

Changes among political independents appear to be the main reason the percentage of conservatives has increased nationally over the past year: the 35% of independents describing their views as conservative in 2009 is up from 29% in 2008. By contrast, among Republicans and Democrats, the percentage who are "conservative" has increased by one point each.

As is typical in recent years, Republicans are far more unified in their political outlook than are either independents or Democrats. While 72% of Republicans in 2009 call their views conservative, independents are closely split between the moderate and conservative labels (43% and 35%, respectively). Democrats are about evenly divided between moderates (39%) and liberals (37%).

Americans Also Moving Right on Some Issues

In addition to the increase in conservatism on this general ideology measure, Gallup finds higher percentages of Americans expressing conservative views on several specific issues in 2009 than in 2008.

Perceptions that there is too much government regulation of business and industry jumped from 38% in September 2008 to 45% in September 2009.

The percentage of Americans saying they would like to see labor unions have less influence in the country rose from 32% in August 2008 to a record-high 42% in August 2009.

Public support for keeping the laws governing the sale of firearms the same or making them less strict rose from 49% in October 2008 to 55% in October 2009, also a record high. (The percentage saying the laws should become more strict -- the traditionally liberal position -- fell from 49% to 44%.)

The percentage of Americans favoring a decrease in immigration rose from 39% in June/July 2008 to 50% in July 2009.

The propensity to want the government to "promote traditional values" -- as opposed to "not favor any particular set of values" -- rose from 48% in 2008 to 53% in 2009. Current support for promoting traditional values is the highest seen in five years.

The percentage of Americans who consider themselves "pro-life" on abortion rose from 44% in May 2008 to 51% in May 2009, and remained at a slightly elevated 47% in July 2009.

Americans' belief that the global warming problem is "exaggerated" in the news rose from 35% in March 2008 to 41% in March 2009.

Gallup has not recorded heightened conservatism on all major social and political views held by Americans. For instance, attitudes on the death penalty, gay marriage, the Iraq war, and Afghanistan have stayed about the same since 2008. However, there are no major examples of U.S. public opinion becoming more liberal in the past year. (Gallup's annual trends on healthcare will be updated in November, so those attitudes are not included in this review.)

The conservative shifts discussed here result as much from changes in political independents' views as from changes in Republicans' views. Democrats' views, by contrast, have generally changed only slightly -- either to the conservative or liberal side -- with two exceptions: Gallup finds greater movement in Democrats' views of abortion, which have become more liberal, and their views of labor unions, which have become more conservative.

Bottom Line

Americans are more likely to consider themselves conservative this year than they were in 2008, resulting in conservatives -- now 40% of the American public -- outnumbering moderates for the first time since 2004. While Gallup first documented this trend in June, the finding has been sustained through the third quarter.

Conservatism is most prevalent among Republicans. However, the overall increase in this ideological stance since 2008 comes largely from political independents, among whom 35% say they are conservatives thus far in 2009 -- compared with 29% last year. Independents have also become more conservative on a number of specific policy issues, including government and union power, the role of government relative to promoting values, gun laws, immigration, global warming, and abortion. Republicans, most of whom considered themselves ideologically conservative in 2008, have also grown more conservative on several of these issues this year, while less change is seen among Democrats.

All of this has potentially important implications at the ballot box, particularly for the 2010 midterm elections. The question is whether increased conservatism, particularly among independents, will translate into heightened support for Republican candidates. Right now, it appears it may. Although Gallup polling continues to show the Democratic Party leading the Republican Party in Americans' party identification, that lead has been narrowing since the beginning of the year and now stands at six points, the smallest since 2005. According to Gallup Managing Editor Jeff Jones, "the Democratic-Republican gap is narrowing because more independents now say they lean to the Republican Party." That trend aligns with the recent changes in how independents perceive their own ideology and where they stand on some key issues.