Originally Posted by BigRedChief
My opinion is that 20% of administration overhead is plenty of margin for a health insurance business. How hard is that to understand?
Just because I chose to not get into stupid ass arguments with people who are not going to change their mind doesn't = "getting my ass handed to me".
With all due respect, your opinion in this matter is uninformed and therefore largely irrelevant.
Insurance companies operate on a fairly tight profit margin already. As has already been pointed out, they profit if the market does well and their investments buoy them. From an underwriting standpoint, they really don't make money.
Now if the economy is doing well, I suppose you're right - this is a fine thing. However, during strong economic times, that's when insurance companies build up the war chests that allow them to ride out downturns. Putting in artificial constraints on how they're allowed to spend their money makes them extremely vulnerable to market swings.
Another quasi-crash could bury even large insurers.
Though as a good populist, I see you've already blamed the 'corporate fat cats' and just think we can go ahead and slash their salaries to make up any shortfalls. But here's the problem - excellent executives are in extremely high demand. If the insurance industry isn't able to pay these guys their market value, they're just going to go to another industry. And now you're looking at a leadership vacuum an an industry that is incredibly important, not just to the economy but to our health as a populace.
!@#$ing around with the insurance companies is a very very bad idea and there is absolutely no benefit to pushing them under or driving away qualified leaders.