Josh, the issue is, how do they get to 4% profit margin? In other words, where does the other 96% of premiums paid go to? Only about 80% goes to actually pay medical bills. In the early 1990s, that was 90%. So the medical insurance industry is not consuming just only 4% of premiums paid to it. It is consuming around
20%. Appx 16% goes to the companies as administrative overhead, appx 4% goes to the shareholders.
Does the medical insurance industry provide enough actual benefit to justify its its 20%?
Wonk Room » Health Insurance Industry Fudges Data To Downplay Its Astronomical Profits
Medicare's administrative overhead is <5%. Yeah, I've read all the stuff about how Medicare's overhead per person covered is actually higher. Considering that the average 65+ y/o is generating many, many times more treatment and bills than the average younger person (what's that factoid - 90% of your lifetime healthcare cost is generated when you are elderly?), Medicare's administrative overhead is, in fact, pretty darned low.