Health Insurance Profits: Not So Outrageous After All?

Ask any bank CEO and they’ll tell you: reporting great profits at the same time lawmakers and advocacy groups are clamoring for an overhaul of your industry doesn’t make for great public relations. Recent positive third-quarter earnings reports by major health insurance companies may put them in the same boat — but do they really deserve to be there?

Some analysts say no.

“Insurance companies are not money trees. They got out into the market and buy health care services and resell those services at some markup at health care consumers. I would argue that markup is not that much,” said Thomas Carroll, a health care analyst at Stifel Nicolaus. “This whole notion of big bad insurance companies is rather silly.”