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As you can see in the graphic below, the main reason that health insurance costs so much is because health care costs so much. Most of the money that health insurance companies take in goes right back out to pay for their policyholders’ claims.

If you add the cost of marketing (which includes my compensation) to the insurance company profits you will get 7%. Would a 7% reduction in the cost of health insurance solve this crisis?

AHIP health insurance dollar

The graphic above is based on information in the AHIP report.

The idea that massive insurance company profits are the cause of our national health care crisis is ridiculous. Any health care reform proposal that is based on the idea that removing these profits will solve our problem should be discarded. Any politician who promotes an idea that is based on this premise is either lying or uninformed.

Logically the solution to the problem must involve reducing the 87 cents that are being spent on health care not on the other 13 cents that goes to marketing, administration and insurance company profits.

Not only has the cost of doctor and hospital services risen, but the frequency of use has also risen. Less nicotine, alcohol and other drugs ingested might make a difference here. More walking and cleaner water might also make a difference. I’m not sure how our government can or should get involve in these areas, but it would seem like some proposals that are designed to help us be healthier might have more impact.

As an insurance agent of over 20 years, I do have an unavoidable bias. However, I also have more information about this industry than most do. I’ve found an industry full of people who appear no more or less scrupulous than the population in general.

It is not hard to find anecdotal evidence that would lead you to believe that the health insurance industry is full of unscrupulous practices. However, we must bear in mind that this is an industry that services over a hundred million people.

I’d love to have your comments on this post. I do read my blog comments almost every day.

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