The thing is, your entire point here is misleading because, as I already stated, it cites two unrelated facts and assumes a relationship that would fit into your narrative.
You have yet to be able to, in any way, verify that any relationship (let alone the one you assume) is in fact there.
………..
Keep in mind how net profit is calculated: net profit = Sales Revenue - cost of goods sold (COGS) - fixed (overhead) costs
"sales revenue" variable (price x quantity)
Only an idiot would claim there is no connection between two “unrelated facts”, further claim that I’m
assuming there is a relationship, then turn around and show exactly how they
are related. BRILLIANT!
Citing an increase in profits leaves too many variables that can explain that increase, not the least of which is an expansion of the client base or a better means to control costs.
You are either being utterly dishonest, or are completely ignorant of the fact that the number of people with private health insurance has been on the DECLINE. Therefore, you cannot blame “expanded client base” for an increase in sales revenue and in turn increase in profits. In fact, quite the contrary: The FACTUAL decrease in health insurers’ client base would, according to your equation above, reduce sales revenue and in turn reduce profits. I was being generous by allowing that factor be flat for my argument.
http://facts.kff.org/chart.aspx?ch=233
http://www.usatoday.com/news/health/2009-07-01-health-insurance_N.htm
http://www.epi.org/publications/entry/webfeatures_econindicators_income_20080826_health/
http://www.msnbc.msn.com/id/32776829/ns/health-health_care/
Diane Rowland, executive vice president of the Kaiser Family Foundation, also noted the decreases in the percentage of people with employer-provided insurance in 2008 for the eighth year in a row. She cited the proliferation of small businesses, which typically decline to offer insurance because of rising premium costs, which could lead to additional declines in private insurance even if the economy improves.
Similarly, to blame changes in overhead costs for an increase in profits, according to your equation, overhead would have to DECREASE in order to result in an increase in profits. The FACT is, overhead costs of private insurers have tracked increases in premiums (
http://facts.kff.org/chart.aspx?ch=217 ), hovering around 11-12% of premiums. (This in of itself is interesting since one would think that overhead costs would track the number of claims processed, which would be more closely aligned with health care expenditures by the insurance companies. Considering premiums have increased faster than expenditures, is this more evidence of the insurance industry opportunistically inflating reported overhead costs to allow them to underreport their real profits? Here’s an interesting article on this topic:
http://www.miller-mccune.com/health/obama-plan-to-cap-health-insurance-overhead-flawed-1459 ) So since premiums have increased, so have overhead costs. Again, I was being generous by allowing that factor to remain flat.
Let’s break your equation down further, shall we?
NP (net profit) = SR (sales revenue) – COGS – FC (fixed costs)
SR = PR (premiums) * NOC (number of clients)
FC = ~0.12 * PR
Therefore:
NP = PR * (NOC – 0.12) – COGS
We know COGS went up 70% from ’00-’07. Since NP is inversely proportional to COGS, increasing COGS puts downward pressure on NP.
We know NOC went DOWN from ’00-’07. Since NP is proportional to NOC, decreasing NOC puts downward pressure on NP.
Neither of those two claims of yours holds water with the facts. Try again.
We know PR went UP 120% from ’00-’07. Since NP is proportional to PR, increasing PR puts upward pressure on NP.
WHY did PR go up more than COGS? Sure, some increase was necessary to offset the decrease in NOC and the increase in COGS otherwise profits would have fallen. But profits DID NOT FALL, they went UP, 428% ON AVERAGE. Did premiums really need to go up 1.7 times as much as COGS? When a company passes along cost increases to their customers while maintaining steady or modest increases in profits, that’s keeping the business going. But when a company gouges the customers with price increases beyond what is necessary to cover increased costs WHILE INCREASING PROFITS way beyond anything that can be remotely described as “MODEST”, that is called CORPORATE GREED.
You still have yet to confront the issue of a "premium tax" that many states impose. That would increase COGS and mandate an increase in premiums by a multiple of the actual tax figure.
IF a “premium tax” is imposed, it would NOT translate to increased COGS. That’s like saying if sales tax goes up, so do the wholesale costs the manufacturer charges the store for goods. A “premium tax” would make “premiums” go up. AGAIN, the figures I’ve used already include increases that have resulted in changes in taxes over the years, in this case, the 70% increase in premiums charged already includes the added taxes (if imposed).
I will reiterate what I already pointed out in a previous thread; what you are doing is ignoring whatever factors lead to the rise in premiums
WRONG. What I have done was by process of elimination, showed that GREED is the only remaining factor that has driven the health insurance industry’s quest for profits through over-inflated premiums above and beyond what would’ve been necessary to cover increases in medical care costs. I have accounted for the primary factor repeatedly blamed by the insurance industry for those premium increases (increases in medical care costs), and have given the benefit of the doubt to the other minor factors (size of client base and overhead costs) by assuming they’ve remained flat over the last 8 or so years. BUT THANKS TO YOU bringing those minor factors into the debate, the data reveals that the client base has shrunk and overhead costs have increased along with premium increases, both of which would apply downward pressure on net profits, NOT UPWARD pressure as you are claiming. This only makes my argument stronger and yours weaker. THANKS.
Some other factor(s) (like increased costs, increases in state government imposed "premium taxes", etc) lead to the increase in premiums.
Instead of continuing to throw things against the wall, why don’t you try some research on your own and provide some actual numbers that support your argument, like HOW MUCH have “premium taxes” increased over the last 8 years, or specifically how much effect have those “premium taxes” had on increased premiums over the years? I’ve already provided the facts on medical care costs, and they have not increased nearly as much as premiums and only explain 2/3 of the increases in premiums. WHAT ABOUT that other 1/3?? OH, that’s right, you are not attempting to engage in an honest debate using facts, and you’d rather diffuse my point with innuendo, distraction and distortion. “Facts” are just an inconvenient myth in your world. The ball is in your court. YOU made the bold claim that a “premium tax” was the cause of increases in premiums. SHOW IT WITH NUMBERS AND FACTS. As I’ve said before, each additional post you make on this topic without providing factual data to back up your argument only exposes your ignorance on the subject and further firms up your position of being one of the most dishonest debaters on this forum.
to blame the increase in health insurance premiums on "greed" is like blaming plane crashes on gravity.
Thanks for acknowledging that greed, like gravity, is an ever-present, unstoppable force in the health insurance industry. *owned*
