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A quick look at United Health's P/L shows a 6% profit margin. This does not quite support the popular rhetoric of a corporation in search of relentless margin

A quick look at United Health's P/L shows a 6% profit margin. This does not quite support the popular rhetoric of a corporation in search of relentless margin (unless the argument is they are bad at it despite all efforts).

lenerdenator 2y ago
... or that they have used creative accounting to come to that number. Regardless, people who are debilitated by injury or illness aren't going to look at 6% and say, "well, jeeze, I guess these guys really are hard done by." They're going to wonder why something that costs them tens of thousands of dollars a year (health insurance premiums) isn't paying for a medically-necessary procedure, profits be damned.
- takinola 2y ago
  All public companies, especially of this size, have their financial statements audited. Of course, shenanigans still happen but I haven't heard any credible claims regarding UNH just yet. More importantly, corporate hanky-panky is almost always designed to boost revenue and margins and not lower them so I am willing to bet the numbers here are trustworthy. > profits be damned. But, profits cannot be damned, at least not if you plan on being a going concern. At some point, the companies need to make a profit otherwise they go out of business and cannot provide any healthcare at all. My point is not that UNH is a sterling example of healthcare service but to point out that the narrative justifying the public outrage is not really logically coherent or supported by evidence. If there is no public healthcare service, you will need to have private insurers. If you have private insurers, they will need to make profit. The best you can do in this situation is make sure there is competition so the profits are not out of line (which seems to be the case) and there is minimal waste in the system (jury is out on that one). Also, public healthcare is not the panacea that it seems to be promoted as. Healthcare is expensive and at some point, limits will be placed to avoid bankrupting the system. Take a look at any number of the systems of any number of European countries and see the wait times, approvals, etc. BTW, I support the idea of a government provided healthcare system, but I just don't think it will solve all the problems the way people seem to think it will.
  - LetsGetTechnicl 2y ago
    I don't think a government-run health system would solve all problems either but it would address a lot of problems re: access, affordability and having a health baseline. Obviously doctors, nurses, supplies, etc are a finite resource and so they can't see everyone all at once so you have to prioritize based on need and severity. I think that's fair compared to... prioritizing based on who can pay.
    - Wytwwww 2y ago
      Why can't US pretty much just directly copy-paste the entirely private (more so than in the the US since there are no Medicare/Medicaid equivalents) Dutch or Swiss systems, though? If a government-run health system is such a contentious issue... turns out privatized healthcare can work just fine if there is sufficient regulation.
      - Aloisius 2y ago
        The US did essentially copy and paste the Swiss system. That's what the ACA was modeled after. It left out a few key bits though - like requiring those who sign up for healthcare backpay premiums for the entire period they were uninsured to whoever they sign up with.
        Wytwwww 2y ago
        Also AFAIK drug prices are fixed nationally and negotiated by the government? Then the basic plan is around 300-400 CHF (regulated by the government) and the deductibles are capped at CHF 2,500. This seems to be covering the overwhelming majority of costs (if we exclude government + cash) since the volume the market for premium/supplementary coverage seems to be pretty small (<20%): https://www.deloitte.com/ch/en/Industries/financial-services/research/swiss-health-insurance.html https://www.deloitte.com/ch/en/Industries/financial-services...
  - Wytwwww 2y ago
    > there is minimal waste in the system (jury is out on that one). How could that be? Unless that's sarcasm.. I mean the US government alone (so excluding all private spending and insurance companies) spends more on healthcare per capita than many European countries which have universal healthcare. Switzerland has a pretty much entirely privatized healthcare system (in theory too a much higher degree than the US) which is (relatively) well regulated. Also considerably higher median salaries and GDP per capita (albeit disposable PPP income is quite a bit lower) yet they spend 35% less on healthcare than the US.
nielsbot 2y ago
Profits after paying executive salaries, right? In any case there should not be a profit motive in (health) insurance.
- welshwelsh 2y ago
  Executive salaries represent less than 0.01% of UHG revenue. Total revenue is about $320B. Thompson's compensation was $1M cash + about $10m stock (the stock part doesn't impact the company's profit margin). In any case, executive salaries are basically a rounding error in the books.
  - Wytwwww 2y ago
    > the stock part doesn't impact the company's profit margin It certainly does if you use GAAP. A lot of tech companies cheat by providing GAAP and non-GAPP figures (of course there are some other cases where it makes sense) to hide stock based comp.
mrtksn 2y ago
Very interesting, the insurance with the highest rejection rate where the medical spendings are twice the cost per capita compared to European average and the median age is younger, the insurance makes only %6? What do you do so wrong? What is your mechanism of getting rid of those who provide you the healthcare at low efficiency and hight cost? In Europe we have elections and when those don't yield the desired results we storm the HQ and replace by force. You can't be expecting that when too many people die the insurance company will lose customers and the shareholders will replace the top management, right?
- Wytwwww 2y ago
  They are required to spend 80% on actual medical care, add various administrative costs etc. and 6% sounds reasonable. Problem is that this incentivizes them to waste as much money as possible but the whole industry has to "agree" to do that for it to work. So that other insurance companies couldn't undercut them.
Wytwwww 2y ago
Aren't health insurance company margins capped? i.e. if they are required to spend 80% on medical care so effectively they can only make more money be bloating costs more and more. It's better to waste $4.75 by maximizing the inefficiency and costs of the entire system thorough extremely overpriced drugs due to various nonsensical middlemen based market structures, administrative bloat etc. and make 0.25$ than to reduce premiums. Of course it still costs $5 to the society. It might actually be better if they had higher margins...

lenerdenator 2y ago

... or that they have used creative accounting to come to that number. Regardless, people who are debilitated by injury or illness aren't going to look at 6% and say, "well, jeeze, I guess these guys really are hard done by." They're going to wonder why something that costs them tens of thousands of dollars a year (health insurance premiums) isn't paying for a medically-necessary procedure, profits be damned.

takinola 2y ago
All public companies, especially of this size, have their financial statements audited. Of course, shenanigans still happen but I haven't heard any credible claims regarding UNH just yet. More importantly, corporate hanky-panky is almost always designed to boost revenue and margins and not lower them so I am willing to bet the numbers here are trustworthy. > profits be damned. But, profits cannot be damned, at least not if you plan on being a going concern. At some point, the companies need to make a profit otherwise they go out of business and cannot provide any healthcare at all. My point is not that UNH is a sterling example of healthcare service but to point out that the narrative justifying the public outrage is not really logically coherent or supported by evidence. If there is no public healthcare service, you will need to have private insurers. If you have private insurers, they will need to make profit. The best you can do in this situation is make sure there is competition so the profits are not out of line (which seems to be the case) and there is minimal waste in the system (jury is out on that one). Also, public healthcare is not the panacea that it seems to be promoted as. Healthcare is expensive and at some point, limits will be placed to avoid bankrupting the system. Take a look at any number of the systems of any number of European countries and see the wait times, approvals, etc. BTW, I support the idea of a government provided healthcare system, but I just don't think it will solve all the problems the way people seem to think it will.
- LetsGetTechnicl 2y ago
  I don't think a government-run health system would solve all problems either but it would address a lot of problems re: access, affordability and having a health baseline. Obviously doctors, nurses, supplies, etc are a finite resource and so they can't see everyone all at once so you have to prioritize based on need and severity. I think that's fair compared to... prioritizing based on who can pay.
  - Wytwwww 2y ago
    Why can't US pretty much just directly copy-paste the entirely private (more so than in the the US since there are no Medicare/Medicaid equivalents) Dutch or Swiss systems, though? If a government-run health system is such a contentious issue... turns out privatized healthcare can work just fine if there is sufficient regulation.
    - Aloisius 2y ago
      The US did essentially copy and paste the Swiss system. That's what the ACA was modeled after. It left out a few key bits though - like requiring those who sign up for healthcare backpay premiums for the entire period they were uninsured to whoever they sign up with.
      - Wytwwww 2y ago
        Also AFAIK drug prices are fixed nationally and negotiated by the government? Then the basic plan is around 300-400 CHF (regulated by the government) and the deductibles are capped at CHF 2,500. This seems to be covering the overwhelming majority of costs (if we exclude government + cash) since the volume the market for premium/supplementary coverage seems to be pretty small (<20%): https://www.deloitte.com/ch/en/Industries/financial-services/research/swiss-health-insurance.html https://www.deloitte.com/ch/en/Industries/financial-services...
- Wytwwww 2y ago
  > there is minimal waste in the system (jury is out on that one). How could that be? Unless that's sarcasm.. I mean the US government alone (so excluding all private spending and insurance companies) spends more on healthcare per capita than many European countries which have universal healthcare. Switzerland has a pretty much entirely privatized healthcare system (in theory too a much higher degree than the US) which is (relatively) well regulated. Also considerably higher median salaries and GDP per capita (albeit disposable PPP income is quite a bit lower) yet they spend 35% less on healthcare than the US.

nielsbot 2y ago

Profits after paying executive salaries, right? In any case there should not be a profit motive in (health) insurance.

welshwelsh 2y ago
Executive salaries represent less than 0.01% of UHG revenue. Total revenue is about $320B. Thompson's compensation was $1M cash + about $10m stock (the stock part doesn't impact the company's profit margin). In any case, executive salaries are basically a rounding error in the books.
- Wytwwww 2y ago
  > the stock part doesn't impact the company's profit margin It certainly does if you use GAAP. A lot of tech companies cheat by providing GAAP and non-GAPP figures (of course there are some other cases where it makes sense) to hide stock based comp.

mrtksn 2y ago

Very interesting, the insurance with the highest rejection rate where the medical spendings are twice the cost per capita compared to European average and the median age is younger, the insurance makes only %6? What do you do so wrong? What is your mechanism of getting rid of those who provide you the healthcare at low efficiency and hight cost? In Europe we have elections and when those don't yield the desired results we storm the HQ and replace by force. You can't be expecting that when too many people die the insurance company will lose customers and the shareholders will replace the top management, right?

Wytwwww 2y ago
They are required to spend 80% on actual medical care, add various administrative costs etc. and 6% sounds reasonable. Problem is that this incentivizes them to waste as much money as possible but the whole industry has to "agree" to do that for it to work. So that other insurance companies couldn't undercut them.

Wytwwww 2y ago

Aren't health insurance company margins capped? i.e. if they are required to spend 80% on medical care so effectively they can only make more money be bloating costs more and more. It's better to waste $4.75 by maximizing the inefficiency and costs of the entire system thorough extremely overpriced drugs due to various nonsensical middlemen based market structures, administrative bloat etc. and make 0.25$ than to reduce premiums. Of course it still costs $5 to the society. It might actually be better if they had higher margins...