Pajamas Media » Health Insurers’ ‘Sins’ Don’t Justify Reform: "Are health insurance companies evil? A web search for the phrase turns up almost a million hits. The common reasons for this passionate indictment are insurance company profits, denial of claims, and rescission of policies. But these do not justify the Democrats’ goal of expanding political control of health insurance. Rather, they call attention to existing controls that unfairly advantage insurers and limit competition that would keep insurers honest. They also suggest government’s failure to enforce contracts.
“No one should profit from another’s misfortune.” This is a common indictment of for-profit health insurance companies. But the opposite is true. Insurance companies profit from their customers’ good fortune. Once you buy a policy, the insurance company profits most if you avoid misfortune and hence submit no claims.
Yet House Speaker Nancy Pelosi has referred to insurers’ “immoral profits.” To put this in perspective, health insurers’ profit margins are about 3%, which the AP calls “anemic” compared to other industries. In 2008, the total profit for the top fourteen insurers was less than $9 billion, or less than $50 per privately insured person in the United States."
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