Three out of four likely New York voters donÃ¢â‚¬â„¢t believe profit margins of 4 percent or less among health insurers to be Ã¢â‚¬Å“excessive,Ã¢â‚¬Â but the average profit margins of health plans in New York state last year were 2 percent.
Only five percent of 800 New Yorkers surveyed in a new Zogby Interactive poll said they would consider a profit margin of four percent or less to be Ã¢â‚¬Å“excessive,Ã¢â‚¬Â while 31 percent of respondents defined excessive profits as margins greater than 10 percent and another 31 percent defined excessive profits as margins greater than 20 percent.
Responses are summarized below to the question, Ã¢â‚¬Å“What would you consider to be an excessive profit margin percentage for a health insurance company?
Profit margin Respondents
4% or less 5%
No answer 18%
The survey was commissioned by Excellus BlueCross BlueShield to gauge consumer knowledge of and attitudes toward health insurer profitability. The survey showed a wide variance of opinion when consumers were asked to provide their personal definitions of Ã¢â‚¬Å“excessiveÃ¢â‚¬Â profits by health plans. It also identified a significant gap in consumer knowledge of actual insurance profitability.
The online survey came from a sampling of Zogby InternationalÃ¢â‚¬â„¢s online panel, which is representative of the adult population that was invited to participate from March 19 to March 22. Slight weights were added to region, party, age, race gender and education to more accurately reflect the population. The margin of error is +/- 3.5 percentage points. Margins of error are higher in sub-groups.
Ã¢â‚¬Å“What we found fascinating about the poll was not just the basic results, but results in the context of the timing of the poll,Ã¢â‚¬Â said David Klein, chief executive officer of Excellus BlueCross BlueShield. The poll was taken during the same weekend that the House of Representatives gave final passage to the national health reform legislation that was signed by the President.
Given the opportunity to put any percent they chose for what they would consider to be an Ã¢â‚¬Å“excessiveÃ¢â‚¬Â profit margin for a health insurance company, only 5 percent of respondents chose 4 percent or less as their level of Ã¢â‚¬Å“excessiveÃ¢â‚¬Â profit. Meanwhile, the average profit margin among HMOs, nonprofit insurers and accident and health insurers was actually 2 percent in 2008, according to the United Hospital FundÃ¢â‚¬â„¢s most recent report, The Big Picture Updated: Current Status of New YorkÃ¢â‚¬â„¢s Health Insurance Markets. By category, the margin averages in that report were 3.4 percent among HMOs, a negative margin of 1.1 percent among nonprofit insurers and a 4.8 percent margin among accident and health insurers. The 2009 profit margins of most health plans in the state are not reported until April, so these data represent the latest available.
A link to the United Hospital FundÃ¢â‚¬â„¢s report: http://www.nyshealthfoundation.org/userfiles/file/Big_Picture_Updated_FINAL.pdf
Respondents also were offered the opportunity to insert any percentage figure they wanted in response to the question, Ã¢â‚¬Å“What profit margin percentage do you think health insurance companies typically make?Ã¢â‚¬Â Only 8 percent of respondents believed the typical margin was 4 percent or less, which reflected what was closest to reality for the insurers of most of the stateÃ¢â‚¬â„¢s privately insured population in 2008. In addition, 45 percent of respondents thought health insurer profits average more than 20 percent.
The responses to the question of current health insurer profit margins are summarized below:
Profit margin estimate Respondents
4% or less 8%
No answer 23%
The online survey was conducted by initially providing consumers with the actual average profit margins among several industries ranging from home improvement stores to computer software products. The average margins were taken from Yahoo!Finance on March 17, 2010, two days before the survey was conducted. Consumers were asked to respond to each of the industriesÃ¢â‚¬â„¢ profit margins and asked to rate the margins on a scale of 1 to 5 representing a range of what they viewed as being Ã¢â‚¬Å“reasonableÃ¢â‚¬Â or Ã¢â‚¬Å“excessive.Ã¢â‚¬Â
After being educated about actual industry profit margins involving a wide variety of products and services familiar to consumers, they were then asked to provide their opinions regarding the various levels of health insurer profits. Respondents were given the opportunity to put any percentage figure they wanted on the remaining two key questions regarding health coverage. The two questions were:
Ã¢â‚¬Â¢ Ã¢â‚¬Å“What profit margin percentage do you think health insurance companies typically make?Ã¢â‚¬Â
Ã¢â‚¬Â¢ Ã¢â‚¬Å“What would you consider to be an excessive profit margin percentage for a health insurance company?Ã¢â‚¬Â
Ã¢â‚¬Å“We believe there are a great number of misunderstandings regarding the costs of health care, and this latest survey shows there are even greater misunderstandings about the costs of health care coverage,Ã¢â‚¬Â said Klein. Ã¢â‚¬Å“We invite anyone to see the full survey and findings at our Web site.Ã¢â‚¬Â
A link to the full survey results: www.excellusbcbs.com and click on News & Information, then fact sheets.