As is his wont, President Obama is trying to sell his health care financing
seizure reform plan by casting it as an “us against them” theme. The guy simply can’t seem to make a point without having a convenient villain to play against — even (or most often) he has to make one up.
So he fell back on big business. More specifically, the big health insurance companies who are making “obscene” profits at the expense of Mr. and Mrs. Average American, and their 2.3 Average American children. (One wonders if the .3 of a child was a result of a greedy surgeon taking away Junior’s feet and tonsils.)
So, just how profitable are these companies?
Not very, it turns out.
Oh, in actual dollars, not that bad. But as a percentage of their total revenues? They suck. The biggest, WellPoint (whose card I carry), scored profits of 4.07% in 2008. That’s how much of their income they managed to keep.
As a point of comparison, the huge, evil, diabolical ExxonMobil couldn’t quite manage a 7% profit margin last year. But since they’re such a huge company, that still worked out to 19 billion dollars.
In either case, if you want to find an industry that offers serious returns for investors, take a look at this list. Forty industries rank higher than Exxon, and 71 better than WellPoint.
You wanna know where some REAL money, as a percentage of total income, goes in the health care field? Ask Dr. Tara Wah, an obstetrician in Tallahassee, Florida. She’s got plenty of time to answer — she gave up her very successful practice when her malpractice insurance premiums topped $125,000 a year. For sixteen straight years, Dr. Wah took home less and less money as that cost kept rising. Eventually, she took home no pay for two months before she finally said “screw this” and left medicine entirely to take up jewelry repair and design.
It’s not just OB/GYNs who have problems here, though. (Although they were John Edwards’ favorite victims — he pretty much single-handedly decimated the practice in his home state.) It’s general practitioners, the “family doctors,” the “primary care physicians” that are the linchpin of our system (and Obama’s nightmare of a plan), too. One doctor has to fork over $11,000 a year in his malpractice insurance, at a time when the government is cutting how much they will pay him for Medicare patients.
Let’s set aside the fact that Dr. Schreiber is a doctor, and look at him as a businessman. He’s the CEO of a small company that employs two nurse practitioners and has revenues of $800,000 a year. Dr. Schreiber is also a highly-trained and highly-educated individual: Doctors, on average, spend at least ten years in training and education before they are licensed, and Dr. Schreiber graduated from medical school 29 years ago. Let’s say he’s had his current practice for 20 years — I can’t find that out, but it’s a reasonable number.
He’s a small businessman who is highly trained, highly skilled, (presumably) quite competent and well liked by his customers, employs two other highly-trained and highly-skilled employees, and his annual take-home pay is $100,000. For that he sees 120 patients a week. That works out to 24 a day, or — presuming he works 8 hours a day, which I highly doubt — 20 minutes per patient.
And that’s purely what Dr. Schreiber, employee, does. Mr. Schreiber, CEO, has to also do all the other routine crap that goes with owning and running a small business.
For that, he gets $100,000 a year. And as the article noted, that’s being threatened as well.
There are a lot of doctors who are simply “going Galt” and opting out of Medicare. It’s not because the doctors can make more money through other providers — it’s that they actually lose money on Medicare. When the costs of processing all the required paperwork and fighting to get actual, timely payment is added up, it often exceeds the amount Medicare chooses to pay. So the doctors would actually be better off just treating people for free.
Which is absurd. So they don’t treat them at all.
There’s a real problem here, beyond Medicare. It’s the costs of malpractice insurance. It’s getting harder and harder for doctors to justify staying in what have been deemed “high-risk” fields because they simply can’t afford to support themselves and their families and their malpractice coverage.
But fixing that will never be a part of Obamacare. The trial lawyers missed their chance to get one of their own into the White House with John Edwards, but they’ve bought and paid for enough other leading politicians — including President Obama, who has a rather spotty record for staying bought if you’re not a union — to keep meaningful reform on this field off the front burner.
So good doctors like Dr. Wah go into the bling biz. So other doctors like Dr. Schreiber start wondering if it’s really worth putting up with all the government paperwork and runarounds.
What’s really important is that Wellpoint made a 4% profit last year, and that is just intolerable. They must be strung up for that.