Profitability can be a mask for what is truly inside. As many of my fellow clasmates have already pointed out, just because they are profitable, it doesn't mean their healthcare is good. Some may choose profitability as a mark of a lot of people purchasing their policies (therefore they must be a good healthcare provider), but others think of profitability as scamming patients out of their money to pay for unnecessary tests, procedures, and salaries. As long as the healthcare is good, by all means, profit away. But we need to ask these companies what exactly are they profiting from and what kind of profits is the consumer getting. I like Nicole's idea of having a report card for each healthcare provider. Regardless of whether or not they profit, they should be able to show consumers what they are offering and how well they stand next to other companies. There is no way the providers are going to show us what they are spending their profits on (which may be a very big sign of what kind of a business they are running), but we should at least be able to see where exactly they are making their money from.

A lot of this talk about profit margins and whether it is good or bad for the consumer sounds very similar to the whole banking crisis situation, with corporate officers receiving bonuses of millions of dollars, while average citizens are trying to make ends meet during this economic recession. I think moderate increases in profit percentages could be overlooked as long as they coincided with significant improvements in healthcare delivery and outcomes. But as we have gone over several times during our course so far, the US remains distant from the top spot in those categories, while spending more for healthcare than other countries by far. Since this is the situation with healthcare spending, and profit percentages are certainly a factor that help to increase that spending, profitability seems to be a bad thing for the consumer, at least here in the US. It is almost as if to say, since we don't have the level of health outcomes that other countries do, the healthcare providers in the US do not have the right to charge the amount that they do, let alone increase their profit margins.

The topic of disproportionately high spending towards specialty care in the US was discussed last week, but that can't be the only piece of the puzzle. We should be identifying other areas of unneccessary spending.

Health care report cards

How much profit or lack of profit one company has does not tell you what kind of health care you would receive from an insurance company. Some non-profit health insurance companies may have really horrible coverage, while other larger "profit hungry" companies may actually provide preventative health services. What we should be able to do on this "wild west" market or even when employers offer multiple choices for insurance, is be able to view report cards. I want to know what percentage of patients with company X get regular cholesterol screening or women over 50 get mammograms, how long is the average wait for a screening colonoscopy, etc. Of course, I would be shopping by price as well, but at least I would be able to make a decision about what kind of insurance plan I would be getting for my money. If I was young and healthy, I may choose to sacrifice some of these items for a lower cost, but maybe by age 50 it would be different. The same health care report cards could be used for different medical groups. As a consumer, I want to know what kind of health care I am spending my money on.

Insurance companies are businesses, and ultimately, operate for profit. However, as mentioned below, an insurance company's profit isn't the most relevant or reliable indicator of value to the consumer. Value is measured by price for provided services, and in health insurance, this might be the best price for best coverage. (This is likely a bigger issue for individuals on the Wild West market, rather than for those who receive coverage through their employer). When shopping for auto insurance, for example, we choose a plan that's based upon price for coverage, rather than the company's profits. (Although the Geico gecko might win us over regardless).

Furthermore, it is difficult to compare companies based upon profit, because companies may differ in terms of size, resources, business models, etc. These factors may affect profitability, which makes it nearly impossible for use in consumer comparisons.

However, this doesn't mean that measuring a company's profitability isn't important. As mentioned in the LA Times article, some publicly traded health insurance companies may be driven to raise prices for investors, rather than keeping the consumer's best interests at heart. In such situations, profit may indicate Wall Street's role in health insurance prices.

It depends

Depending on who you ask, profit is good and bad. If you're the one who has to shell out an enormous amount of money to purchase health insurance, your first thought it that you're spending too much. However, if you're a company trying to sell a product, profit is a good thing.

I read an interesting article that talked about the implications of rising healthcare costs on health insurance companies, rather than on individuals. It talks about a never-ending "positive feedback" loop where companies hike up prices, healthy individuals can no longer afford to pay high premiums and drop out, and companies hike up prices again due to loss of money on the remaining sick population. http://trueslant.com/rickungar/2010/02/16/private-health-insurance-industry-in-‘death-spiral’/

Related to last week's class

(this is unrelated to the current topic, I just thought it would be an interesting addendum to last week's class.)

Dr. Stevens showed a chart in class relating child mortality rates and GDP and he got it from the Karolinska Institute. They have made what they do freely available, and the program is really, really cool and you can use it here:

Gapminder

One of the professors and leading people at Karolinska (and Gapminder) is Hans Rosling, and he's done a number of TED talks about global health (and other global trends). He shows some of the fun ways to use this program. I highly recommend you check him out, as he's a very engaging speaker and his insights are great. I embedded his first talk here, so hopefully you have 19 minutes to spare to check it out. Admittedly, this has little to do directly with public health, but Rosling is very good at showing how to interpret data and trying to change people's preconceived notions about the world.



If you want to check out some of his other talks (they're all super fascinating), just peruse the Gapminder video section. Also, I must mention that a lot of these deal with health issues very directly (i.e. breast cancer). And they're shorter (4 minutes or so).

Profit doesnt say much

Of course it is important for insurance companies to make money in order to pay out when those who are insured have health care bills that need to be covered. However, profitability is not a direct measure of how much money insurance companies will shell out for medical bills. One may assume that profitability is bad because that means more money is taken and less bills are covered, but insurance companies could have high profit margins due to a lot of customers, or a lot of healthy customers. If an insurance companies has a high profit due to covering a large amount of individuals it may be believable that they offer a good product since many people have decided to purchase it. However, individual needs may not always match the majority and the majority may be misled into what they believe is a good deal. Individuals who are looking to invest in the stock market for certain insurance companies may benefit from looking at profit margins, but when it comes to purchasing health insurance there are far more important things to look at. Individuals should be concerned with premium costs, deductibles, what exactly is being covered under the insurance plan and whether or not it fits your specific needs.