I read it to mean that for every $1 of insurance sold, $.80 had to be spent on benefits (care.)
The would be 20% gross margin and who knows how little operating income margin. Basically none I would say.
“The would be 20% gross margin and who knows how little operating income margin.”
This is an interesting approach though. Of course it would be unnecessary absent gvt intervention in the economy. But of course our current system of health insurance owes its existence to tax law - and is hence an abboration anyway.
Accordingly, there is little incentive for insurance businesses to trim try to save any money. As long as none of them do, they’re safe.
Insurance is treated as a “must have”. The demand for it is elastic.
While one would think this would yield windfall profits, it’s been my experience in life that instead it usually leads to massive inefficencies instead (eg. excess head count to justify mgmt positions, etc.).
Why not? It’s someone else’s money!
You are correct. It’s not operating margin, it’s gross margin, which for some is being cut to 15%.
Well, lower the thermostat, turn off the outside lights and lay people off, but add more customers and provide them with free stuff!
And when the companies fail due to government mandate, the government will have no choice, regrettably, to take over the health insurance industry to avoid a crisis. Many will be begging the government to do just that, for the children.
This is a combo of the Hegelian Marxist dialectic and the Cloward-Piven strategy of government takeover.