“Yet Health Insuramce companies are raking in record profits with CEOs taking 60 million dollar bonuses.”

Very misleading statement. The profit margins of health insurance companies are right around that of grocery stores. 86th or so on the list of most profitable industries. Not so great.

Dr. Mark J. Perry, a professor of economics and finance in the School of Management at the Flint campus of the University of Michigan, has noted that, according to data from Yahoo business, the health insurance industry, with an average profit margin of 3.3 percent, is the 86th most profitable industry.

And all those CEO’s make, in cash, about 1–2M a year — — go look at the financial statements of the corporations, they lay it all out for you. Those bonuses come from stock awards, which are just how corporations legally mint money; they create stock for the purpose of the award, and the only ones that pay for that are the shareholders in dilution. Put another way, if those guys DIDN’T get 60 milllion dollar bonuses, it wouldn’t change the insurance rates a single penny.

Here’s an example from United Healthcare:

So, you can see that the comp for ALL the key execs in 2015 was 47M. The CEO made a cash salary of 1.3M, but his total comp was 14M. The rest was all incentives and most of that was in stock awards. This is very typical. I;m not saying that CEO pay isn’t crazy sometimes, or even often, but it’s incorrect to think that they are taking PROFITS to pay their execs in cash. They’re not. It’s done through stock.

The only distortions in the market are the way Medicare figures out fair pricing and the useless for profit middlemen.

Well….not really. Since Medicare doesn’t pay the providers enough to turn a profit on the encounter, they just overbill their patients with private insurance. Here’s a nice chart that shows the effect of this in the state of Washington. You can see how hospitals (doctors do this too, btw) are taking a loss on Medicare and Medicaid, and covering it my overcharging the private sector.

So you suggest that with unprecedented bankruptcies as a result of medical debt, that people should be made to pay even more money they dont have, so they choose to be sick or get even worse before they are in an emergency situation, costing society far more or just dying.

Nope. There are ways to cover the bankruptcy problem relatively cheaply. Same for preventative care, which mitigates the “emergency” problem substantially. Most of the costs in the US (I think around 80%) amongst the pre-Medicare population are chronic conditions like diabetes. That’s the population we need to invest in.

Yet you maintain their situation will be better because GDP and productivity may be higher under Trump? The gains of such productivity as we currently see is funnelled to the top amidst stagnant wages and increasingly low skill low paying jobs?

The economy is stuck in a 2% growth rut. If you’re running it at 3.5% (dare we hope for 4!) you’re producing more productive jobs. Everyone moves up the value chain, searching out the best job they can get for the skills and experience they have.

So yes, if he can hit those growth rates, you will see improved wealth up and down the income ladder. The inequality issue is much more difficult, so I can only be optimistic by pointing out that before Trump and Sanders, everyone was ignoring this problem, so for the first time people are going to try and address it rather than pretend it doesn’t exist; and that’s a good thing.

Data Driven Econophile. Muslim, USA born. Been “woke” 2x: 1st, when I realized the world isn’t fair; 2nd, when I realized the “woke” people are full of shit.

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store