US healthcare: Profits before patients

[ElNono]

Service providers are also low single digits profits.

Margins for pharmas get into the teens. Whether a 15% profit margin is "excessive" or not will vary from person to person I suppose. Allowing Americans to start buying prescription meds from other countries would certainly push those margins down somewhat. I 100% think this is something that needs to happen. Still, I don't think squeezing pharma margins down into the single digits where the rest of the healthcare sector is operating is going to have the dramatic effect on overall prices that people are looking for.

Tens? Are you sure about that?

By delaying Ranbaxy’s generic version of Lipitor, which might have been sold as early as March 2010, Pfizer has won extra time for exclusive sales of Lipitor, potentially totaling billions of additional dollars. Lipitor’s current price can exceed $3 a day, while a generic version might eventually sell for well below $1. (source)

That's in the vicinity of 33% if my math is right. Patent protection is a huge cash cow for these companies.

Generic care *IS* a lot cheaper than what we pay. Medical tourism is just simple evidence of that.

[coyotes_geek]

Tens? Are you sure about that?

That's what I see here.

http://biz.yahoo.com/p/5qpmd.html

By delaying Ranbaxy’s generic version of Lipitor, which might have been sold as early as March 2010, Pfizer has won extra time for exclusive sales of Lipitor, potentially totaling billions of additional dollars. Lipitor’s current price can exceed $3 a day, while a generic version might eventually sell for well below $1. (source)

That's in the vicinity of 33% if my math is right. Patent protection is a huge cash cow for these companies.

This is the prime example of the situation that would be solved by allowing people to buy their meds from other countries.

Generic care *IS* a lot cheaper than what we pay. Medical tourism is just simple evidence of that.

No arguement here. I'm all for generic compe ion.

[Wild Cobra]

Health Insurer Profits Jumped 250% in Last Decade

Profits for the 10 largest U.S. insurance companies jumped 250% between 2000 and 2009 while millions of Americans have lost coverage, according to a report released Thursday by the U.S. Department of Health and Human Services. The report found that the five biggest insurance companies -- WellPoint (WLP), Cigna (CI), UnitedHealth Group (UNH), Aetna (AET) and Humana (HUM) -- saw their profits increase 56% in 2009, a year in which 2.7 million people lost their private coverage.What's more, the report found that the companies combined earned a total of $12.2 billion last year.

http://www.dailyfinance.com/2010/02/...n-last-decade/

Who cares. Too many factors, including having to increase profit margins in preparation of the changing health care laws.

I'll bet that slice of time is from a low point in 2000. 250% profit increase could also mean that it jumped from 1% to 3% profit margins plus inflation.

, medical inflation alone can probably account for 50% or more.

I don't see tangible numbers to make any usable assessment. Therefor I see this as hype. I good journalist would have pt in usable hard facts.

If you go by stock prices, they are about equal as a group to 5 years ago. The prices peaked in Jan 08 and were their lowest in Jan 09.

The devil's in the details. I have started looking at the 10 statements by these companies. 2000 was a common low point and there was a peak just 2008. Like any other industry, I could make a case that they were affected by the 2006 election where democrats took control of congress, and the bailouts in 2008 and 2009. After all, it takes time for policy to take effect.

Why doesn't the author use numbers before 2000 or after 2009? Nice cherry picked data from the graphs I see.

[ElNono]

That's what I see here.

http://biz.yahoo.com/p/5qpmd.html

Thanks. I read they've been struggling to come up with new/popular drugs recently. Their margins are going to keep on shrinking.

This is the prime example of the situation that would be solved by allowing people to buy their meds from other countries.

And that's the best selling drug ever. I fully expect them to seek some sort of extension before the November deadline.

No arguement here. I'm all for generic compe ion.

[RandomGuy]

Who cares. Too many factors, including having to increase profit margins in preparation of the changing health care laws.

I'll bet that slice of time is from a low point in 2000. 250% profit increase could also mean that it jumped from 1% to 3% profit margins plus inflation.

, medical inflation alone can probably account for 50% or more.

I don't see tangible numbers to make any usable assessment. Therefor I see this as hype. I good journalist would have pt in usable hard facts.

If you go by stock prices, they are about equal as a group to 5 years ago. The prices peaked in Jan 08 and were their lowest in Jan 09.

The devil's in the details. I have started looking at the 10 statements by these companies. 2000 was a common low point and there was a peak just 2008. Like any other industry, I could make a case that they were affected by the 2006 election where democrats took control of congress, and the bailouts in 2008 and 2009. After all, it takes time for policy to take effect.

Why doesn't the author use numbers before 2000 or after 2009? Nice cherry picked data from the graphs I see.

Fair points all.

The report the article was based on, along with the hyperlinked sources can be found here:
http://www.healthreform.gov/reports/...ers/index.html

I will say this much:

Health insurers are spending no small amount of money and effort figuring out the uncertainties of health care reform.

Republican efforts to stop the ball rolling only adds to that.

A lot of these recent rate increases are probably, in my opinion, quite justified. The risks that these companies will be exposed to will be greater, and their overhead costs are also greater.

Insurance companies, to be able to pay for the risks they assume have to have the reserves *before* they assume them, in order to remain solvent.

That said, I think we should keep a VERY sharp eye on companies that are obviously trying to simply pad their profits for no reason.

IF the increased rates turn out not to be justified, that would be something to address, mainly because of the one really really damning factoid from that report that should worry everybody:

More than 94 percent of insurance markets in the United States are now highly concentrated.

The assumption that we have a truly "free market" when it comes to health insurance is mostly not a valid one.

Larger insurers have come to hold dominating shares of the market for health insurance.

Monopolies, one of the inevitable results of free markets, have begun to take over.

If your argument about the government running your health insurance is that large burocracies are hugely inefficient, your health insurance is run by one anyways. Not only is health insurance becoming dominated by such burocracies, these en ies are required, by the definition of being "for-profit" to charge more than what it costs them to provide the service.

In the end I don't see much difference between a single-payor government run insurance system, and a state-by-state monopoly of interrelated companies.

I just wish we could be honest enough to accept that reality. I would far prefer the former over the latter, because I view that as being far better for the economy as a whole.

[Wild Cobra]

I traced Wellpoint back to 2004 so far with the income sheets. Profits were:

$millions

2004: 960.1
2005: 2,463.8
2006: 3,094.9
2007: 3,345.4
2008: 2,490.7
2009: 4,745.9
2010: 2,887.1

Notice the big jump in 2005? We have a increase of 394% on this one alone from 2004 to 2009. However, the percentage profit went from 4.69% to 7.3% and back to 4.91% in 2010. Read this:

On November 30, 2004, Anthem, Inc. acquired WellPoint Health Networks Inc. and Anthem, Inc. changed its name to WellPoint, Inc. Accordingly, fourth quarter and full year 2005 financial results include operations of the combined company for the entire periods. Fourth quarter and full year 2004 financial results, however, only include operations of the former WellPoint Health Networks Inc. for the one month ended December 31, 2004.

On December 28, 2005, WellPoint, Inc. acquired WellChoice, Inc. For accounting purposes, the transaction was assumed to have closed on December 31, 2005. Accordingly, fourth quarter and full year 2005 income statement and operating cash flow results do not include operations of the former WellChoice, Inc. However, balance sheet and membership information as of December 31, 2005, does include the former WellChoice, Inc.

This is pretty common when acquisitions happen. Can't consolidate all the paperwork. I wonder how many of these other listed companies acquired others in that 10 year period? I wonder how many others this company acquired I didn't find? I only looked for these acquisition because of the large jump.

I think I made my point, how journalists make agenda based news once again. If someone wants to show me wrong, search the reports like I did.

Numbers are easiest to find for the last 3 to 5 reported periods. Here are 2008 numbers for percentage profit:

WLP: 4.07%, 7.30%, 4.91%
AET: 4.47%, 3.67%, 5.16%
CI : 6.82%, 16.11%, 6.33%
UHN: 3.26%, 4.39%, 4.92%

That large profit for CI in 2009 doesn't look normal. Also skewed the numbers. In good data analysis, outliers are often thrown away.

[RandomGuy]

I traced Wellpoint back to 2004 so far with the income sheets. Profits were:

$millions

2004: 960.1
2005: 2,463.8
2006: 3,094.9
2007: 3,345.4
2008: 2,490.7
2009: 4,745.9
2010: 2,887.1

Notice the big jump in 2005? We have a increase of 394% on this one alone from 2004 to 2009. However, the percentage profit went from 4.69% to 7.3% and back to 4.91% in 2010. Read this:

This is pretty common when acquisitions happen. Can't consolidate all the paperwork. I wonder how many of these other listed companies acquired others in that 10 year period? I wonder how many others this company acquired I didn't find? I only looked for these acquisition because of the large jump.

I think I made my point, how journalists make agenda based news once again. If someone wants to show me wrong, search the reports like I did.

Numbers are easiest to find for the last 3 to 5 reported periods. Here are 2008 numbers for percentage profit:

WLP: 4.07%, 7.30%, 4.91%
AET: 4.47%, 3.67%, 5.16%
CI : 6.82%, 16.11%, 6.33%
UHN: 3.26%, 4.39%, 4.92%

That large profit for CI in 2009 doesn't look normal. Also skewed the numbers. In good data analysis, outliers are often thrown away.

Why don't you apply the same level of skepticism and industrious research into underlying assumptions on things you agree with?

[Wild Cobra]

Why don't you apply the same level of skepticism and industrious research into underlying assumptions on things you agree with?

That's a figment of your imagination. I do.