news-record.com

There's a world of difference between a fact-checking story by the AP and what Fox News does. So I'm assuming you understand that, with your tongue firmly planted in your cheek.

So, old story/new circumstances. What's also an old story is getting profits wrong. When I worked at the AMA in the late '80s, the doctors who ran the place were convinced that the medical-malpractice crisis was a creation of the insurance companies, whose profits were obviously obscene. And perhaps they were when expressed in dollars. But not when expressed, as they should be, as a rate of return or a percentage of revenues. So I'm not surprised that the same mistake is being made now.

The accusation of "obscene" profits is an important populist rallying cry, used mostly by the left but increasingly by the right as well. Both O'Reilly and Beck tap aggressively into populist sentiment. In any case, the rallying cry is often wrong. More importantly, it's often beside the point. What matters about health insurers is their actions, not their profits. I mean, sure, if their profit margins were huge, then that'd be another thing to complain about. But high profits or low profits, what health insurers DO is the problem. Maybe they do what they do precisely because their margins are relatively thin. Who cares? The point of reform is their behavior.

Alright, fair enough. The left is exaggerating the "obscene" profits of insurance companies. Of course, the right is also saying government-run insurance can't work while supporting Medicare.

It's also worth pointing out that profit margins don't tell the whole story. Wal-mart's are in the 3-4% range and no one denies that they make a ton of money. As recently as 2005, average newspaper profit margins were 20%, yet no one would call your industry healthy one.

I also agree that the actions of the industry are the problem more than profits. Despite the rhetoric, the legislation reflects this idea too as it preserves the private insurance system but adds regulation.

Good catch, Brian, that was a glaring error of the headline writer. It was also a mistake of the writer to compare insurance companies to drug and medical products. Selling patentable products (the patents being especially important to the drug industry) creates different conditions and opportunities for monopoly rents that would be much harder to come by in providing a service like insurance coverage.

It turns out I was right (as usual). There are 53 industries on the Fortune 500 list, found here:

http://money.cnn.com/magazines/fortune/fortune500/2009/performers/indust...