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Insurance companies don't really make that much money. Neither do hospitals. The median profit margins are between 3-4%. The problem isn't an insurance monopoly

• bzbarsky 10y ago
  There's a lot of argument as to how much money insurance companies make, and whether the right thing to measure is profit margin, or return on capital, or something else. For example, an insurance company that gets $100 in income, then spends $90 on medical care and $7 on lobbying to keep its monopoly has a profit margin of $3, which is not very much. But it's not obvious to me that a company that spent $90 on care, nothing on lobbying, and got $2.50 in profit by charging $92.50 would not be viable, absent the lobbying. And you're right: by no means are insurance companies the only ones in this sector that engage in attempts at regulatory capture and creation of monopoly profits. Though I should note that pharma companies have a lower return on capital than insurance companies last I checked, because pharma is so capital-intensive in practice. I haven't really looked into medical device manufacturers.