The Insurance Industry

I am all for reforming the health care system, but using the insurance industry as villains is simple-minded and not particularly convincing. Sure enough, every day there are stories about an insurance company rescinding its contract with a patient after they discover that there was an unannounced (and possibly previously unknown) pre-existing condition. We hear about denials of treatment, and worse. Undoubtedly, one of the goals of any health care reform effort should be to get rid of some of these practices.

Nevertheless, the story that the big hungry profit-seeking insurance companies are to blame for rising premiums and mass deaths and bankruptcies is false. For one, the average profit-margin in the insurance industry is... 3.9%. Read here for more. That is far less than the profit margin in most US industries. Also, don't forget that Blue Cross and Kaiser are two large, nonprofit insurance companies.

The fact of the matter is that health insurance costs in the US are high and rising quickly because health care costs are high and rising quickly, not because insurance is in and of itself so expensive.